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Hill Intl board rejects $276m private equity bid

Bidder DC Capital Partners wants to reduce project manager's exposure to Middle East

Hill International is managing the Jabal Omar Development Project in Makkah, Saudi Arabia
Hill International is managing the Jabal Omar Development Project in Makkah, Saudi Arabia

Hill International's board has unanimously rejected what it described as an "unsolicited" bid from private equity firm DC Capital Partners.

DC Capital Partners had issued a bid of at least $5.50 per share, or almost $276m, for the project management consultancy, which was a premium of 40.7% over its closing price of $4.85 at the end of last week.

DC Capital already owns the Michael Baker engineering consultancy business, which employs around 2,900 people in the US, and in a letter to Hill's CEO David Richter, DC's president Thomas J. Campbell said it was willing to bid independently or in partnership with Michael Baker.

Campbell also expressed concerns about Hill's "disproportionate exposure to the Middle East region" - in 2014, around 47% of its consulting fees came from the region - by far its largest market.

However, Hill's board has issued a statement arguing that the bid "substantially undervalues" its shares. It also announced a 'stockholder rights plan' as a defence against the bid. It would issue one preferred share for every share already held by investors if any bidder were to acquire more than 15% of the company, thereby making it much more expensive for a bidder to gain control.

The firm said the strategy was aimed at promoting a long-term value strategy "without undue pressure from coercive, short-term tactics'.

Richter said: "Hill's management team has a strategic plan in place that we believe will significantly increase stockholder value. We believe that DCCP's extremely inadequate offer attempts to hijack this creation away from our existing stockholders and put it into their private pockets."

Hill International currently employs 4,800 people in 100 offices worldwide. In 2014, it reported an 11% increase in income to $640.3m. However, higher costs and one-off fees relating to a debt refinancing meant the firm posted a loss of $10.9m.

It finished the year with a record backlog of $10.8bn.

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Mar 21, 2020