Building concern
November 30, 2010
Spanish construction group Actividades de Construccion y Servicios (ACS) took a decisive step forward in its hostile takeover bid for Germany's largest builder Hochtief on Monday, gaining approval from financial regulators.
Germany's financial supervisory authority Bafin gave the green light to the proposal after improvements were made to an earlier offer to shareholders.
"With the revised offer document submitted today, ACS provided all the required improvements. Therefore Bafin has approved the proposal," a statement from Bafin said.
An official period for Hochtief shareholders to accept will begin with the publication of the official ACS offer, expected in December.
The approval is a blow for the Hochtief board, which has been fighting the takeover for months.
Opponents of the takeover fear that it could lead to a restructuring of the company, with German employees bearing the brunt of job losses.
Hochtief's chief labor representative, Siegfried Mueller, sharply criticized the German government shortly before the announcement. He said that workers had been "left in the lurch" by a lack of direct state intervention.
In October, the head of Germany's Social Democrat opposition party, Sigmar Gabriel, called on Chancellor Angela Merkel to find a rival corporate "white knight" to prevent the takeover.
Share-swap deal did not satisfy
ACS announced plans in September to launch a 2.7-billion-euro ($3.6 billion) shares bid for the 70 percent of Hochtief that it did not own.
The Madrid-based concern has been seeking a deal based on the swapping of stakes in both companies. Hochtief bosses said the original offer did not reflect the German firm's current market value of around 4.3 billion euros.
ACS became Hochtief's biggest shareholder in 2007 by acquiring a 25-percent stake.
It has since increased holdings to just below an important 30 percent threshold, which it may now exceed. This would allow ACS to acquire shares on the open market and gradually achieve its target of 50 percent ownership of Hochtief.
The head of Hochtief, Herbert Luetkestratkoetter, has been seeking to prevent the takeover. He said he would "definitely" take strategic action.
Hochtief's management had considered making the inclusion of its Australian subsidiary, Leighton, a mandatory part of the deal in a bid to increase the price and make it harder for ACS to acquire the company.
Author: Richard Connor (AFP, dpa, Reuters)
Editor: Nancy Isenson