International contractor CIMIC Group Ltd (ASX:CIM) has announced its intention to acquire Sedgman Ltd (ASX:SDM) through its subsidiary CIMIC Group Investments Pty Ltd (CGI).
Details of the Offer
CIMIC, who already owns approximately 36.9% of Sedgman Ltd, has intended to make an offer for the remainder of the shares, through an off-market takeover. CIMIC offers $1.07 per share, which is a 35.4% premium to the closing price of Sedgman on the 12th January 2016, which was $0.79. The price offered for the acquisition is final in the absence of a competing proposal.
CIMIC over the last 15 years, has been a rather active investor within Sedgman. It initially acquired a 50% stake in 2001, 5 years before its IPO.
Additionally, CIMIC’s global mining subsidiary Theiss has been involved in several engineering joint venture projects with Sedgman.
As the offer is not subject to any conditions, CGI intends to exercise its rights under item 2 of section 611 of the Corporations Act. The company also authorises Credit Suisse Equities (Australia) Limited to purchase Sedgman shares offered around, or lower than the offer price on behalf of CGI.
The nature of the offer allows shareholders to exit a rather illiquid position for all of their shareholding in Sedgman without the requirement to pay brokerage fees, along with the opportunity to receive value within the first week of acceptance.
Intentions of the Acquisition
If the offer is accepted, CIMIC intends to change the board of Sedgman, reconsider the dividend and capital management policies of the company and continue with its previous plans of increasing market and commodity diversification.
CIMIC also aims to maintain the services of Sedgman’s current operating employees for the time being. However, in cases where certain roles may not be needed, CIMIC will attempt to find alternative employment within the CIMIC Group.
CIM shares were last traded at $22.84 as at 12:04 PM (AEDT), rising 1.6% increase since the opening.
Author: Imran Valibhoy
Jan 13, 2016
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.