Hochtief Seeks $347 Million Buyback After Shares Decline

Hochtief AG, the German builder controlled by Spain’s Actividades de Construccion & Servicios SA, will buy back as much as 260 million euros ($347 million) of shares over the next six months after the stock closed at its lowest in two months.

The buyback of 4.3 million shares represents about 5.6 percent of the Essen, Germany-based builder’s capital, it said in a statement yesterday. That will boost Hochtief’s stake in itself to 10 percent.

Hochtief decided to buy back shares after the stock declined 10 percent in Frankfurt trading in the past month. The company closed yesterday at 48.87 euros, the lowest since April 8 and valuing the company at 3.9 billion euros. Today, the stock jumped as much as 8.1 percent.

Chief Executive Officer Marcelino Fernandez Verdes is aiming to stabilize profitability and focus Germany’s largest construction company on its main building business, reversing a decade-long strategy of expanding into services. Verdes, who joined from ACS, last month reached a 1.5 billion-euro deal to sell the airports division and is also seeking to offload property development and facility management units.

Aligned Interests?

“There’s been a lot of speculation that ACS is upstreaming a lot of cashflow from Hochtief or breaking up the company,” Madrid-based Kepler Capital Markets analyst Borja Castro said by phone. “For some people that were skeptical, this could give an indication that the interests are aligned with those of shareholders.”

ACS, based in Madrid, currently owns 49.9 percent of Hochtief’s outstanding shares with 54.3 percent of the voting rights, according to the company’s website.

Hochtief jumped as much as 3.95 euros today, the most since Nov. 7, and was up 6.9 percent as of 9:50 a.m. in Frankfurt.

Pretax profit in the first quarter surged to 123 million euros from a year-earlier loss of 92 million euros, beating analyst estimates. Hochtief predicts full-year pretax profit of between 600 million euros and 680 million euros, excluding earnings from the airports and one-time reorganization costs.