South African construction group Murray & Roberts (M&R) says that by securing full control of Clough, it will be in a stronger position to leverage the Australian company’s oil and gas expertise in Africa.
CEO Henry Laas reports that the JSE-listed group is keen to pursue oil and gas prospects in Mozambique, Tanzania and South Africa and that the proposed acquisition will strengthen its hand in what is poised to be a high-growth sector.
On Thursday the South African company, which already owns 61.6% of the company, made an offer to acquire all the remaining shares in Clough for A$1.46 a share. The offer comprises a cash payment of A$1.32 a share and a dividend of A$0.14.
The offer is subject to a number of conditions, but M&R has outlined a mid-December implementation date for the transaction.
Clough has already become a major part of the group’s current earnings and order backlog, with its Australasian construction oil and gas interests making up R20.6-billion of an overall order book of R45.7-billion.
In fact, M&R is predicting that its international operating platform, which comprises Clough and underground mining activities in North America, will soon be contributing 75% of earnings before interest and taxation. The remaining 25% will be derived from its South African, African and Middle Eastern businesses.
Laas says the deal will offer M&R better exposure to market sectors that offer long-term growth potential and that the execution risks are “low”, owing to the fact that it already has a good understanding of the business.
He acknowledges that the Australian liquefied natural gas investment cycle is likely to taper in the coming two years, but says Clough is positioning itself to play a significant role in the maintenance of these LNG assets.