South Africans move to buy remaining shares in Clough
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 stock at $1.46 cash a share.
Shares in Clough, which was established in 1919, jumped 28 per cent to $1.43 on Wednesday.
Clough chairman Keith Spence said the offer 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 added that if conditions such as 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 on a multiples basis, the South Africans' proposal appeared "reasonable".
She said it was unlikely that the WA firm, which manages oil and gas projects in Australia and south-east Asia, would receive another offer as any suitor would have to pay a large premium to take out Murray & Roberts, although the Clough board has left such an option open.
Ms Clarke noted that Clough was sitting on $364 million in cash after selling a marine construction business and its 36 per cent stake in engineering services company Forge. Its list of clients includes Chevron's Wheatstone and Gorgon projects, and Woodside's Pluto.
"The argument could be made that it is slightly opportunistic, given Clough's cash balance," she said. "The market had been waiting for Clough to make an acquisition given its large cash balance. Murray & Roberts will now be a beneficiary of the remaining cash post the 14¢ dividend."
The $1.46 will comprise of a $1.32 cash payment from Murray & Roberts and a 14¢ fully franked dividend from Clough.
The dividend could include up to an additional 6¢ a share for shareholders able to use the franking credit.