CIMIC faces Macmahon competition
Contracting giant CIMIC is in a race to secure another 17 per cent of Macmahon Holdings, or use a narrow window to lift its 14.5¢ bid for the company, to beat the risk of being washed back down Macmahon’s register.
Macmahon last week delivered on its promise to find a white knight to save it from CIMIC’s 14.5¢-a-share takeover offer, announcing a non-binding deal with Indonesia’s PT Amman Mineral Nusa Tenggara for a life-of-mine contract at the giant Batu Hijau copper/gold mine.
If consummated, the agreement could see AMNT emerge with up to a half-ownership in Macmahon under a scrip-for-kit swap that would see the WA contractor take control of the project’s mining fleet.
A condition of the proposed deal is that CIMIC must not capture more than a 40 per cent holding in Macmahon before it is formalised, leaving the Spanish-controlled contractor on a tight time frame to extend its 23.3 per cent stake in Macmahon. CIMIC has not yet provided a detailed response to the proposed tie-up and it is unclear whether it will decide the agreement is a “competing proposal”, allowing it to lift its offer for Macmahon shares.
That task was made harder by market reaction to the deal, as Macmahon shares closed at 16.5¢ — 2¢ above CIMIC’s offer price — after gaining 1.5¢ for the day. Under the agreement with AMNT, Macmahon would acquire equipment from AMNT worth about $US150 million in exchange for shares, priced at 20.3¢ each.
In exchange it wins a contract worth about $US2.7 billion at the former Newmont operation over 14 years, with $US2 billion incurred in the five years from next January. A formal valuation will set the final terms but Macmahon said last week it expected to issue about 960 million shares to the Indonesian company, delivering it a stake of 44.4 per cent.