Crumbling defense

The Australian Takeovers Panel said Monday that it won't block or modify the bid by Actividades de Construccion y Servicios (ACS) to acquire Germany's Hochtief - a deal that would give ACS a 54.5 percent stake in Australia's biggest construction company, Leighton Holdings.

The regulator said it did not view the circumstances of the downstream acquisition as "unacceptable."

Ulitmate goal: Leighton

The German and Australian companies had asked the Takeovers Panel to intervene in ACS' 2.76 billion euro all-share takeover offer for Hochtief on the grounds that Leighton was the ultimate target. Hochtief's stake in Leighton is valued at almost as much as the whole of the Essen-based construction company.

In its submission to the panel, Leighton said it was concerned that if ACS grabbed Hochtief's stake, minority shareholders in Leighton would be disadvantaged and the company would lose the independence it had enjoyed under German stewardship.

But statements by ACS to the contrary have prompted both the Takeoves Panel and Leighton to embrace the deal.

ACS has contacted Leighton and indicated a willingness to enter into a written and binding governance agreement, according to Leighton chairman David Mortimer.

Independence assurance

"We are encouraged by the public statements from ACS and their direct contact, and intend to actively pursue such an agreement to protect the interests of our minority shareholders,” Mortimer said in a statement.

“Leighton believes the existing governance arrangements, which have been in place for a long period with Hochtief, have contributed substantially to the value created for all of Leighton's 67,000 shareholders. We welcome the opportunity to put in place appropriate and similar governance arrangement with ACS."

In August, ACS made a hostile all-share bid to raise its stake in Hochtief from 29 percent to 50 percent. The German construction company, which has been trying to block the takeover ever since, had appealed to the Australian regulator in an attempt to force the Spanish company into a cash bid for Leighton.

Hochtief is running out of options. Last week, German Economics Minister Rainer Bruederle said that although he would like to see the company's headquarters remain on German turf, he was not willing to intervene in the market process. Chancellor Angela Merkel agreed on both counts.

Author: John Blau (dpa, Reuters)
Editor: Sam Edmonds