ACS expected to move fast on Hochtief stake

Analysts flag further stake building after reaching equity threshold

Hochtief workers protesting against the takeover attempt last year.
Hochtief workers protesting against the takeover attempt last year.

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Analysts expect ACS to move fast to consolidate its controlling stake in Germany’s Hochtief after a protracted hostile takeover.

The Spanish construction company passed the 30% mark of shares it owns in the German rival on 4th January, after a four-month process that saw Hochtief appeal to authorities and bring in new shareholders to fight the takeover.

ACS now owns 30.34% in the company after a tender offer was accepted by 3.09% of those with voting rights, according to the FT. ACS is looking to build its stake further through buying shares of other stakeholders and on the open market. It will no longer have to make an offer to all Hochtief shareholders, as per German regulation.

But Hochtief's rising share price – up 12.8% since the beginning of September, though slipping since the takeover announcement – is expected to cause reluctance by some shareholders to part with their stock to the ratio of five Hochtief shares to nine ACS shares, the agreed deal between the companies.

“ACS shares currently have a value of €58 – that’s €32.25 price, times nine, divided by five,” explained one analyst in London to CW this afternoon, who declined to be named. “Hochtief shares are currently around EUR 60.8, so investors would be losing €2 per share.”

“That’s why no-one is tendering their shares,” the source said, despite the pledge by Southeastern Asset Management, the third-largest investor, to sell a 2.66% stake earlier this year. The source said it was unclear whether the 30.34% stake amassed by ACS included the pledge by Southeastern.

“My suspicion is no.”

ACS first made an approach to Hochtief on 16th September, an apparent surprise to the German company according to a statement by CEO Herbert Lütkestratkötter. Since then the German company has resisted attempts for a full takeover, even appealing to the Australian Securities & Investments Commission – Australia’s stock market regulator – to highlight that to take effective control of the company, ACS would also need to make a takeover offer for Leighton Holdings Limited: Hochtief holds a 54.5% stake.

Hochtief had also embarked on a capital raising programme, which gave investors the opportunity to increase their stake in the company – at the same diluting that of ACS. Last month Qatar Holding, Qatar’s sovereign wealth fund, bought a 9.1% stake in Hochtief. The source said that Hochtief presence in Qatar would be of interest to ACS.

Marc Nettelbeck at DZ Bank estimated that based on Hochtief’s share price increase since the inclusion of Qatar Holding, and the dilution of ACS’s holding from 29.99% down to around 27% , means the Spanish firm may have had to pay around €130 million (US$173.5 million) more to cross the “threshold” 30% ownership.

The source added that ACS was likely to want to “consolidate their position as soon as possible”, and that it could have a 38% ownership by the end of the month.

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