Construction and engineering group Murray & Roberts (M&R) plans to acquire a further 38.4% stake in Australian firm Clough for A$446-million or about R4-billion.

The group already owns 61.6% of Clough and has proposed to buy the remaining shares in the Australian firm at A$1.46 a share. The A$1.46 a share will comprise a A$1.32 cash payment by M&R and the payment by Clough of a dividend of A$0.14 a share.

The dividend is expected to be fully franked, providing up to an additional A$0.06 a share for those Clough shareholders who are able to use the franking credit.

“This proposed acquisition is strategically compelling, consistent with our long-term growth plans and the next logical step to fulfill our strategic objectives,” M&R CE Henry Laas commented.

The group noted that, following the disposal by M&R of its manufacturing businesses, the proposed transaction creates a focused international diversified engineering and construction business, leveraging respective capabilities and management competencies across Australasia, South East Asia and Africa.

Further, the acquisition was expected to increase M&R’s exposure to target market sectors, which are considered to present long-term growth potential; to allow the group to better leverage Clough’s oil and gas capabilities and expertise into opportunities in Africa; and to create a strong platform for the further expansion of M&R’s international business.

The group plans to fund the proposed acquisition through a combination of existing cash, cash on Clough’s balance sheet and modest acquisition financing.

The proposed acquisition would be implemented by way of a scheme of arrangement under the Australian Corporations Act.

The proposed transaction was still subject to final approval by M&R following the satisfactory completion of confirmatory due diligence; the negotiation, finalisation and execution of a scheme implementation agreement between the group and Clough; and a unanimous recommendation by Clough’s independent directors in support of the transaction.

M&R said the Clough independent directors have indicated that they would unanimously support the transaction.

“The proposal represents an opportunity for Clough shareholders to realise a premium value for their investment. The offer price is at a premium to the all-time high price at which Clough shares have traded on the ASX,” commented Clough chairperson Keith Spence.