Engineering a takeover bid for Clough

By InvestSMART · 1 Aug 2013

By InvestSMART ·
1 Aug 2013

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South African builder Murray & Roberts has made a takeover bid for Clough that values the West Australian engineering company at more than $1.1 billion. Murray & Roberts, which owns 61.7 per cent of the firm, said it would acquire Clough's remaining shares at $1.46 cash a share.

Shares in Clough, which was established in 1919, closed 28 per cent higher at $1.43 on Wednesday.

Clough chairman Keith Spence said the proposal was an opportunity for shareholders to "realise a premium value for their investment".

"Murray & Roberts has indicated that they do not intend to make any material changes to the operations or management of Clough. They have been strongly supportive of the management of Clough and their strategic plan," he said.

He said if due diligence checks and the approval of the Murray & Roberts board were met, Clough's independent directors would unanimously support the takeover bid.

RBS Morgans analyst Alexandra Clarke said Murray & Roberts' proposal appeared to be "reasonable". She said Clough was sitting on about $364 million in cash after selling a marine construction business and its 36 per cent stake in engineering services company Forge.

The $1.46 will comprise a $1.32 cash payment from Murray & Roberts and a 14¢ fully franked dividend from Clough.

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Frequently Asked Questions about this Article…

What takeover bid has Murray & Roberts made for Clough and how much is Clough valued at?

South African builder Murray & Roberts has made a takeover bid that values West Australian engineering company Clough at more than $1.1 billion, offering $1.46 cash a share for the remaining stock it does not already own.

How much of Clough does Murray & Roberts already own?

Murray & Roberts already owns 61.7% of Clough before making the takeover bid for the remaining shares.

What is the per-share breakdown of the $1.46 offer for Clough shares?

The $1.46 per share offer comprises a $1.32 cash payment from Murray & Roberts plus a 14 cent fully franked dividend paid by Clough.

How did Clough’s share price react after the takeover proposal was announced?

Clough shares closed 28% higher at $1.43 on the Wednesday after the proposal was announced, reflecting strong market reaction to the bid.

Will Murray & Roberts make major changes to Clough’s management or operations?

According to Clough chairman Keith Spence, Murray & Roberts has indicated they do not intend to make any material changes to Clough’s operations or management and have been supportive of Clough’s management and strategic plan.

What conditions must be satisfied before the takeover of Clough can proceed?

The takeover is conditional on due diligence checks and approval by the Murray & Roberts board; Clough’s independent directors said they would unanimously support the bid if those conditions are met.

What do analysts say about Murray & Roberts’ proposal for Clough?

RBS Morgans analyst Alexandra Clarke described Murray & Roberts’ proposal as appearing “reasonable,” noting Clough’s strong cash position following recent asset sales.

Does Clough have the cash to support the 14 cent fully franked dividend included in the offer?

Clough was reported to be sitting on about $364 million in cash after selling a marine construction business and its 36% stake in engineering services company Forge, which is consistent with the company being able to pay a 14 cent fully franked dividend as part of the offer.