German construction giant Hochtief AG has shelved plans for a full takeover of Toronto-based Aecon Group Inc. following rejection of its bid by shareholders. Hochtief had offered $6.95 a share.
BY PATRICIA WILLIAMS
STAFF WRITER
German construction giant Hochtief AG has shelved plans for a full takeover of Toronto-based Aecon Group Inc. following rejection of its bid by shareholders. Hochtief had offered $6.95 a share.
In a statement posted on its Web site, Hochtief said the vote was swayed by perceived fair value. The company said shareholders’ expectations “markedly” exceeded the bid price.
“Hochtief regrets the decision, but will not be further increasing its offer,” the company said. “The shareholding and its attached strategic opportunities had been carefully appraised and valued … .”
In 1999, Hochtief acquired a 49-per-cent equity interest in Aecon through a private placement of debt and equity that was used to fund the Toronto company’s acquisition of BFC Construction.
As part of a review of minority positions it holds in several companies around the world, Hochtief announced jointly with Aecon in late May that it was formally proposing to acquire the balance of the Aecon shares that it did not already own.
The $6.95 bid price represented a 36-per-cent premium over the previous 30-day weighted average trading price of Aecon common shares.
In a July 21 statement, Hochtief said the unsuccessful takeover plan leaves its basic strategy of focusing its business portfolio unchanged.
“The group continues to support the ongoing restructuring efforts at Aecon to attain its ambitious earnings targets. Hochtief will unlock the growth potential identified for the Canadian market by maintaining its established working relationship with Aecon while intensifying cooperation between subsidiaries Turner Construction (in the United States) and Hochtief Construction Services Europe.”
Hoctief said it will resume discussions with the Aecon management and board “in due course with a view to recharting the strategic options.”
Aecon chairman and chief executive officer John Beck said the shareholders’ decision to reject the so-called amalgamation proposal “speaks loudly” of their confidence in the company’s future.
“You essentially have said that you see considerably higher value in Aecon than the market has recognized to date,” he told the company’s annual and special meeting of shareholders.
“Importantly, you have also signalled that you expect management to do what is necessary to bring this embedded value—and more—to the surface. This is an expectation that is completely justified.”
In an interview following the meeting, Beck said it is ‘business as usual” at Aecon, Canada’s largest publicly traded construction and infrastructure development company.
Aecon last year had total revenues of $972 million.
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