The Foreign Investment Review Board (FIRB) has approved of a deal that would see John Holland, a subsidiary of Leighton Holdings (ASX:LEI), sold to a Chinese company. The state owned China Communications Construction made the $1bn bid in December of last year, but the deal was delayed pending proper approvals. Australian regulators took additional time to evaluate the acquisition because of John Holland’s contracts with the Defence Department and China Communications’ disbarment from World Bank projects. The Australian subsidiary is a key provider of Defence Department business and has an estimated $570m worth of defence contracts. China Communications Construction was disbarred from working on World Bank projects because it was the successor to another Chinese company that was similarly banned from World Bank projects. Both firms were found guilty of colluding in bidding projects in the Philippines.
Treasurer Joe Hockey said on Wednesday that investigations had been conducted in relation to the defence contracts and the disbarment of the Chinese company. “Appropriate arrangements have been put in place to mitigate any concerns in relation to this issue and I am satisfied that this investment is not contrary to our national interest,” Mr. Hockey said. John Holland provides many services, including administration, medical facilities, airfields, aircraft hangars, maintenance workshops, vehicle shelters and armouries. China Communications hopes this acquisition will help expand its businesses in road, rail, tunneling and water infrastructure projects in Asia. The parent company of John Holland, Leighton Holdings, has recently made headlines after it was awarded a $US608m contract to build reservoirs and other water infrastructure projects in Qatar. Shares of LEI are up 20c, or .95 per cent, at $21.35 per share around 2:16pm on Wednesday.
Author: Imran Valibhoy
Apr 08, 2015
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.