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Leighton plans to
merge with
construction giant
SYDNEY: Lcighton
Holdings Ltd announced
plans yesterday for a S34.1
million merger with Thiess
Contractors Pty Ltd which
is designed to transform
the merged group into a
dominant force in the con
struction and civil engi
neering industries in Aus
tralia and the Asian-Pacif
ic region.
The merger will also lead
to a link-up between
Leighton and Hochtief
AG, the second largest
construction group in West
Germany.
The link will take the
form of a large minority
shareholding by Hochtief
in the merged group, under
provisions which would in
sure the independence and
Australian control of the
expanded group.
Leighton's chief ex
ecutive officer, Mr Stew
ard Wallis, said yesterday,
"The plan will increase our
ability to compete in the
big league - for construc
tion contracts of $100 mil
lion or more - not only in
Australia, but in South
East Asia and the South
Pacific."
Under the plan, Lcighton
will issue 22 million of its
ordinary shares to acquire
Thiess from Thiess Con
sortium Ltd, a holding
company owned jointly by
Hochtief and Westfield
Ltd.
Hochtief will buy out the
Westfield half, giving it
the 22 million shares in
Leighton. When added to
HochtiePs present 9.9 per
cent stake in Leighton,
built up over the past three
months, Hochtief's
shareholding would in
crease to 36 percent.
The agreement provides
for Hochtief to raise its
shareholding to 40 percent
as circumstances permit,
but also contains several
conditions intended to
"guarantee Leighton's in
dependent Australian iden
tity."
These stipulate that
Hochtief will be precluded
from holding more than a
40 per cent interest in
Leighton, and that
Hochtief representatives
on the Leighton board will
be limited to three out of
12 directors.
The agreement also pro
vides for the transfer of
benefits from Hochtief to
Leighton.
These include access to
Hochtief's technology, pat
ented designs, construction
techniques and advice, and
undertakings that the large
German group will "pro
vide support and financial
backing (to) enhance the
leighton group's standing
and competitiveness."
Under the agreement,
Hochtief woutd also "give
up the right to tender for
all contracts of interest to
Leighton in Australia,
South-East Asia and the
Pacific."
The provisions limiting
Hochtief to a maximum
stake of 40 per cent, to
gether with the offer of
technological and financial
assistance, are intended to
win approval for the
merger plan from the For
eign Investment Review
Board.
The formal application
for the merger was lodged
with the F1RB on Tuesday.
A decision is expected
within four weeks.
Mr Wallis said Leighton
had been seeking to ex
pand through a merger
since 1980, and in that
time had held discussions
with groups in the US,
South Africa and Britain.
"But all those nego
tiations faltered over the
issue of Australian con
trol," he said.
Mr Charles Berg, direc
tor of Hochtief Ltd, the
Australian subsidiary of
Hochtief AG, said the of
fer of minority status did
not present any obstacle
for the West German
giant.
He said Hochtief had
made it a policy to expand
abroad by taking minority
equity interests in con
struction companies with
proven track records.
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