By Robb M. Stewart
MELBOURNE, Australia--Leighton Holdings Ltd. will sell its John
Holland building division to China Communications Construction Co.
for about 1.15 billion Australian dollars ($950.9 million), giving
the Chinese firm a large foothold in Australia and allowing
Leighton to cut debt as its German parent company tightens its
grip.
Sydney-based Leighton said it had signed a binding agreement to
sell the business to a unit of the Hong Kong and Shanghai-listed
CCCC, one of the world's biggest construction companies. The sale
is subject to conditions including approval from Australia's
Foreign Investment Review Board.
The deal follows a strategic review launched in June by
Marcelino Fernandez Verdes, the chief executive of majority owner
Hochtief AG who took the reins at Leighton in March as the German
company moved to increase its stake in the Australian company.
Leighton is also considering the sale of its services and
property businesses or taking on partners as it refocuses on such
operations as engineering and contract mining.
Mr. Fernandez Verdes said the company, after an extensive global
sale process, achieved a price for John Holland that reflects its
position as one of Australia's leading engineering and construction
companies.
The proceeds will allow Leighton to cut its debt-to-equity
position and will be used to finance growth, particularly in
public-private partnerships, he said.
With the sale, about 1,400 employees will transfer to CCCC
International Holding Ltd. It will lead to a fall in Leighton's
annualized revenue of about A$3.7 billion and a drop in
work-in-hand of about A$5.4 billion, the company said.
Leighton has been working to rebuild its balance sheet after
taking a hit in recent years from problematic infrastructure
projects and the global financial crisis. It has been sharpening
its focus on major construction contracts such as airports and
Asian casinos as mining investment has slowed globally.
It recorded a net profit of A$430.2 million for the nine months
through September, down 3% on a year earlier when profits were
bolstered by the sale of a majority stake in its telecommunications
assets
The John Holland business provides contracting and engineering
services to industries including energy and mining, with operations
across Australia and New Zealand as well as in South East Asia and
the Middle East.
Write to Robb M. Stewart at robb.stewart@wsj.com
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