Hochtief AG (HOT), which has sought to fight off a takeover bid from Spanish builder and major shareholder ACS SA for more than two months, said Qatar Holding LLC plans to buy a 9.1 percent stake to help deepen cooperation.
Hochtief will increase its stock by about 10 percent by issuing shares at 57.114 euros each. Qatar’s investment of almost 400 million euros ($534 million) will strengthen Hochtief and will support growth after a canceled bond sale in September, Chief Executive Officer Herbert Luetkestratkoetter said.
“I could imagine Qatar raising their stake further. It makes it more difficult for ACS,” said Heino Hammann, an analyst at Norddeutsche Landesbank Girozentrale. “This is far from over.”
The capital increase would dilute the stake held by ACS to about 27 percent, making its goal of moving beyond a 30 percent stake in Hochtief more expensive. Qatar will host soccer’s 2022 World Cup, the first Arab nation to hold the world’s most-watched sporting event, in a potential construction boom for stadiums and related infrastructure.
Hochtief shares rose as much as 3.87 euros, or 6.4 percent, to 63.99 euros today, the most in seven months. The stock has gained 18 percent so far this year, valuing Hochtief at about 4.4 billion euros. ACS gained as much as 2 percent in Madrid.
Luetkestratkoetter said Qatar had signaled interest in a stake even before ACS disclosed its intention to buy Hochtief, and that talks progressed over a dinner hosted by German Chancellor Angela Merkel for Qatar Prime Minister Hamad bin Jassem bin Jaber al-Thani in November that he also attended.
“It’s like in a partnership,” said Luetkestratkoetter. “You get to know each other, and eventually decide to take it to the next level.”
Hochtief decided on the capital increase without consulting ACS’s representatives on its supervisory board, the executive said. ACS spokeswoman Phoebe Kebbel declined to comment.
ACS, whose full name is Actividades de Construccion y Servicios, has approval from Germany’s financial regulator for its 2.7 billion-euro bid for Essen, Germany-based Hochtief. ACS is proposing eight of its own shares for every five of the German builder’s, which opposes the offer, saying it doesn’t give shareholders value. Investors have until Dec. 29 to decide.
The German government “did not chip into” the Hochtief takeover offer and “backed off” on the issue, Economy Minister Rainer Bruederle said in a statement today.
Qatar plans to more than double the number of hotel rooms, build nine stadiums and refurbish three others and construct a rail and metro network for the soccer tournament. In 2009, Hochtief won a contract worth 1.3 billion euros to construct an avenue of offices and shops in Qatar, the largest single contract in the history of its construction unit.
“With the Cup in sight, this could accelerate what had already been an ongoing trend,” said Rachel Ziemba, senior analyst at Roubini Global Economics LLC in London. “If they can invest overseas in companies that will bring them expertise and help them with domestic goals, that’s a big plus,” she said.
Other German companies where Qatar has invested include carmaker Volkswagen AG. Hochtief said it will use the money from the capital increase to finance projects such as the offshore-wind business, and expansion in India and Canada.
Qatar plans to spend $4 billion on stadium construction and refurbishment, with each facility cooled by a solar-powered air-conditioning system. A new 200,000-population city called Lusail that Hochtief is helping develop is scheduled to be built over the next decade and will feature the stadium that hosts the World Cup final.
“This transaction cements our relationship with one of the key trading partners for the development of infrastructure ahead of the World Cup in 2022,” Ahmad Mohamed Al-Sayed, CEO of Qatar Holding, said in a statement.
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