Sorry, its a little lengthy to prove one small point.
Published: 21 May 2008 6:11 PM Macmahon offers $446mln for Ausdrill, plans further acquisitions
By Rebecca Le May
PERTH, May 21 AAP - Construction and engineering firm Macmahon Holdings Ltd says it will continue seeking acquisitions in addition to its $446 million takeover offer for mining services group Ausdrill Ltd.
Macmahon chief executive Nick Bowen told a media teleconference today that further acquisitions and securing more overseas work continued to be its growth strategy.
Macmahon is offering 1.45 of its own shares for every Ausdrill share, valuing the stock at $2.59 each.
The offer is subject to a minimum acceptance of 50.1 per cent.
Ausdrill shares rose 14 cents, or 7.18 per cent, to $2.09, while Macmahon shed four cents, or 2.24 per cent, to $1.745.
Macmahon said in a statement today the merged entity would be a "leading diversified mining contracting and civil construction company" with a market capitalisation of about $1.4 billion, Chairman Dick Carter told the teleconference that the two companies were highly complementary.
He said that combined they would be the only Australian firm that could offer end-to-end contract mining, extending the range of services available to their merged customer base.
Ausdrill provides services including drill and blast, exploration, and procurement and logistics in Australia, United Kingdom and Africa.
Mr Carter said the proposed transaction would give Macmahon scale, diversification and geographical spread.
"Macmahon is looking to grow its business overseas and Africa is one of the places that we've been looking," he said.
"It's important for us that we grow and match the way that our customers in the mining sector in particular are consolidating.
"It will give us the size and sophistication to be able to provide the level of service our customers are going to require in the future.
"Ausdrill is a fine company, Macmahon is a fine company and together they will be a great company."
Macmahon chief financial offer Ross Carroll said the acquisition, if successful, would not affect Macmahon's bottom line until 2008/09.
"I think it will take two or three months to consummate then once we get over 50 per cent shareholding, we can start to consolidate the Ausdrill business into Macmahon," Mr Carroll said.
"Ausdrill's profit, analysts are saying, should be in the vicinity of $33 million this year and our expectations are around $47 million, so you're looking at about a 40 per cent increase."
Mr Carter said Macmahon would benefit from a stronger balance sheet, given Ausdrill's cash holding of about $100 million.
"We'll be in a position to be able to take advantage of opportunities as they emerge."
This was a quicker and more desirable way to strengthen Macmahon's financial position than raising capital, he said.
Today's announcement comes a year after Ausdrill revealed it had been "confidentially" approached by a party with assets worth about $2 billion in regard a potential takeover.
Mr Bowen said Macmahon was not the predator being referred to in that instance but had held discussions with Ausdrill last year.
Mr Carter said he notified Ausdrill chairman Terence O'Connor about the takeover offer just before the announcement was made public today.
"It was something he wasn't expecting ... but he's an unflappable sort of chap and we had a cordial conversation."
He said he expected Ausdrill to "react positively" to the "very compelling proposal".
"It will make Ausdrill much more liquid than it is on its own.
"We think there is better value for their shareholders."
Mr Bowen said in a statement that Ausdrill shareholders would benefit from improved commodity diversification through exposure to Macmahon's operations in iron ore and coal.
Macmahon's bidder's statement will be lodged tomorrow.
Mr Carter said Macmahon planned to retain the services of all Ausdrill staff.
"It will give employees a greater career scope and probably greater security," he said.
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