Leighton Holdings Ltd. (LEI), Australia’s biggest builder, surged the most in three years in Sydney trading after opening a delayed desalination plant and amid speculation Vinci SA (DG) may buy assets.
The builder, which is ultimately controlled by Madrid-based Actividades de Construccion y Servicios SA, surged 8.4 percent at the close to A$17.05, the biggest gain since August 2009. The benchmark S&P/ASX 200 Index rose 0.3 percent.
The water plant in Victoria state has begun pumping at about a third of capacity, ending delays that contributed to Sydney-based Leighton falling about 50 percent in the past two years. Vinci, Europe’s biggest builder, may be interested in “certain activities” of ACS and it’s looking at Canada and Australia, its Chief Executive Officer Xavier Huillard said in a Sept. 16 interview with Financial Times Deutschland.
The catalysts for Leighton “are the removal of risks around problem projects and the potential for asset sales,” said Graeme Carson, an analyst at Patersons Securities Ltd. “You can realize the value in Leighton over the next nine to twelve months just by having a clean year and removing some of the balance-sheet risks.”
The company could also raise A$1 billion ($1 billion) selling its NextGen high-speed data network, he said. ACS controls Leighton through its German unit Hochtief AG. (HOT)
The Victoria plant will be working at full capacity by the end of the year, Leighton Chief Executive Officer Hamish Tyrwhitt said in a statement today. The builder also opened a delayed Brisbane airport road to traffic on July 25.
Separately, Leighton affiliate Macmahon Holdings Ltd. (MAH) halted its shares today saying it will update its earnings forecast due to the deteriorating performance of its construction business. Leighton owns 19 percent of the company.
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