ann: new sembawang proposal, page-5

Source

MICHAEL SMITH
Financial Review

Sembawang Australia has just upped the stakes in the battle for control of Macmahon Holdings’ construction business.

The Singapore-based company has this morning released a letter sent to Macmahon chief executive Ross Carroll outlining a revised offer for the construction business which is being sold to Leighton Holdings.

Sembawang chief Richard Grosvenor has upped his original offer to buy the business as a going concern to $38 million from $25 million. Alternatively, he has made a separate stand-alone offer based on the same terms and conditions at the Leighton offer but for an additional $5 million.

The offers are subject to due diligence.

There is still a lot of scepticism in the market about Sembawang’s interest and the revised offer is light on detail.

It will, however, make it harder for Macmahon to ignore the proposal now on the table.

Sembawang has also threatened legal action against the sale of the business to Leighton, alleging it approached Macmahon in November. This was before it signed a memorandum of understanding with Leighton which prevents it from granting a third party due diligence.

Given the public criticism of Macmahon by Sembawang and some bad blood between Grosvenor and his former employer Leighton it seems hard to imagine either party agreeing to a friendly deal.

Macmahon is in a tight spot. It has a duty to shareholders to negotiate the highest offer for the business but is committed to a deal with Leighton that was agreed as part of what was effectively a rescue package.