Thiess has put fellow contractor MACA into play, launching a $350m friendly cash bid for the WA mining services business.
Thiess, now owned by CIMIC and activist fund manager Elliott Investment Management, lobbed a $1.025 a share bid for MACA shares.
The offer values MACA at about $350m, with the cash bid a 42 per cent premium to the company’s volume weighted average trading price over the last month
MACA shares spiked on the bid news, jumping 23 per cent to 98c in a fractionally higher market.
The offer has been unanimously supported by MACA’s board and management, subject to a positive review from an independent expert report, with MACA co-founder and chairman Geoff Baker telling shareholders the Thiess bid was a “compelling offer at an attractive price”.
But the details of the transaction suggest the door is also open if a rival bidder emerges. While the friendly deal requires MACA directors to recommend the Thiess offer, no break fee is included and there appear to be none of the customary “no shop, no talk” clauses common to most friendly tie-ups. MACA’s board is free to change their recommendation if a superior offer is made.
Thiess also noted in its bidder’s statement that it had conducted no formal due diligence on MACA’s books ahead of the bid, other than reviewing its statements to the market. It is understood the contracting major has only been in direct talks with MACA since last week.
While a window is open for an alternative offer, Thiess’ bid for MACA comes at a tricky time for potential rivals. The WA mining sector is booming, but shortages for skilled labour has also led to rapid cost inflation for miners and contractors alike.
Consensus analyst estimates tip MACA’s full year results to show $1.6bn in revenue and a healthy $200m in earnings before interest, tax, depreciation and amortisation. But the Thiess bid also comes amid a recent tumble in commodity prices that will put additional pressure on margins for both miners and contractors – something that may give pause for thought among other potential bidders.
Thiess said on Monday it plans to continue to operate MACA under its current brand and structure. Acquiring MACA would give it far greater reach into the WA mining and civil construction market, however, which Thiess has traditionally struggled to penetrate.
Only one of its major Australian mining contracts is in WA, the Mt Holland lithium project now owned by Wesfarmers, with the bulk of its local work still in east coast coal mines.
MACA has also become one of the early movers among mining services contractor on autonomous haulage vehicles for smaller mine sites. MACA chairman Geoff Baker said in a statement MACA believed Thiess right partner at the price the company offered.
While MACA directors unanimously recommended the Thiess offer, they said MACA shareholders should not take any action until a target statement – including an independent expert report – was completed in late August.
CIMIC was taken private by its Spanish parent company in April, and Thiess was separated from its main construction business in a joint venture with Elliott Management in 2020.
MLD Price at posting:
98.5¢ Sentiment: None Disclosure: Not Held
