CIMIC Group has drafted in investment bank JPMorgan to help consider strategic options for some of its mining services operations under the Thiess and Sedgman brands.Street Talk understands CIMIC and its bankers' review has reached the stage where it will consider buyer appetite for the assets, and potential acquirers have been approached to take a closer look.
It is understood CIMIC's advisers which include JPMorgan started signing up interested parties to non-disclosure agreements this week ahead of a formal process.The non-disclosure agreements will give interested parties access to diligence materials, including a comprehensive set of historic earnings figures and forecasts.Together, Thiess and Sedgman represent CIMIC's mining and mineral processing companies.
CIMIC combined Thiess with the mining operations of Leighton Contractors, HWE and Leighton Asia to create the world's largest mining services group in 2015, while Sedgman is a minerals processing business.Both units operate in Australia and offshore.The assets potentially up for grab are believed to be worth more than $1.5 billion.CIMIC reports earnings for Thiess and Sedgman as part of its mining and minerals processing unit which Macquarie analysts will make $520 million profit before tax in 2019, which would be enough to see the business unit valued at $4.9 billion to $5.5 billion.CIMIC's review of Thiess and Sedgman comes amid a wider shake-up among Australia's mining contractors. One of the other largest players, Downer Group, is reviewing options for its own mining services arm and has hired Macquarie Capital to help find a buyer.Downer's move comes as the group shifts away from its mining roots and towards soft services, including cleaning, catering and facilities management contracts for government and other clients.It is not known what has sparked CIMIC's review. The company is notorious for keeping its cards close to its chest. While listed on the ASX, it is majority owned by Germany's Hochtief, which is controlled by Spanish company ACS.At the company's half-year results in August, CIMIC told shareholders its mining business was "continuing to strengthen" with a "positive outlook for volumes both domestically and globally".The move comes as analysts and fund managers take a close look at CIMIC's accounts, and particularly its cash flow statement.For JPMorgan, the role comes seven years after it sold another piece of Thiess on behalf of what was then Leighton Holdings. JPMorgan ran the sale of Thiess' waste management unit which was snapped up by Remondis for $218 million.
CIM Price at posting:
$31.38 Sentiment: None Disclosure: Held
Len
