Cimic Offers to Buy Aussie Engineer UGL in $398 Million Deal

  • UGL shareholders to receive A$3.15 per share at 47% premium
  • Takeover target has slumped since disclosure of project delays

Cimic Group Ltd., the Australian construction company controlled by Germany’s Hochtief AG, offered to buy UGL Ltd. in a deal valuing the engineering firm at A$524 million ($398 million).

Cimic, which took a 13.8 percent stake in Sydney-based UGL in a block-trade Monday, offered A$3.15 per share in cash for the remaining stock, according to a statement to the stock exchange. That’s 47 percent more than UGL’s last closing price on Friday.

UGL shares have slumped 42 percent since early June when the company said there were substantial delays and disruption to a liquefied natural gas project it is building for a client in Darwin.

The target recommended shareholders take no action and said its board will meet as soon as possible to consider the offer. Its shares rose 48 percent to A$3.16 at 11:09 a.m. in Sydney, while Cimic gained 1.8 percent.

Cimic plans to delist UGL and reconstitute its board, according to the statement. It has received Foreign Investment Review Board approval for the offer, which will be funded through available funds or existing debt, Cimic said.

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