MacMahon challenged over Leighton sale
An Indian-based firm, Sembawang Australia - a subsidiary of the engineering group Punj Lloyd - has instructed its lawyers to file a suit against MacMahon after being denied access to conduct due diligence on the Australian company.
Last week it emerged Sembawang Australia had made an offer to buy MacMahon's construction operations for $25 million, but MacMahon has said it could not provide access to its books without the permission of Leighton.
Leighton and MacMahon signed off on an asset purchase agreement in December. MacMahon is looking to divest its construction business and become a dedicated full-service mining contractor.
Sembawang's chief executive, Richard Grosvenor, said his company approached MacMahon on November 26 about joint ventures and the potential purchase of its construction business.
But MacMahon has denied the claim, saying the only offer it had received from Sembawang was its unsolicited, non-binding proposal received on January 3.
MacMahon is continuing preparations for an extraordinary general meeting in February, at which shareholders will vote on the deal with Leighton.
The announcement of an earnings downgrade in December came after MacMahon warned investors in September that its annual profit would be about half the $56.1 million of the previous year.
Frequently Asked Questions about this Article…
An Indian-based firm, Sembawang Australia (a subsidiary of Punj Lloyd), has instructed lawyers to file a suit against MacMahon after being denied access to carry out due diligence on MacMahon’s construction business. The dispute relates to competing claims about when Sembawang approached MacMahon and whether MacMahon could provide financial access while an asset purchase agreement with Leighton was in place.
Sembawang Australia is the Australian arm of the engineering group Punj Lloyd. According to reporting, it made an offer of $25 million to buy MacMahon’s construction operations and said it first approached MacMahon about joint ventures and a potential purchase on November 26.
MacMahon said it could not provide access to its financial records without the permission of Leighton, because MacMahon and Leighton had signed an asset purchase agreement in December related to the sale of the construction business.
MacMahon and Leighton signed an asset purchase agreement in December. MacMahon is preparing for an extraordinary general meeting (EGM) in February where shareholders will vote on the proposed deal with Leighton.
Shares in MacMahon have come under pressure as the company deals with the legal challenge from Sembawang and uncertainty around the sale process. The legal dispute, combined with recent profit warnings, has added to investor concern.
MacMahon is aiming to divest its construction business so it can focus on being a dedicated full-service mining contractor.
Yes. MacMahon announced an earnings downgrade in December. Earlier, in September, the company warned that its annual profit would be about half the $56.1 million it earned the previous year.
Investors should monitor the outcome of the legal action by Sembawang Australia, any updates on due diligence access or competing offers, announcements from MacMahon and Leighton, and the results of the extraordinary general meeting in February where shareholders will vote on the Leighton deal.
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