Spanish infrastructure company Ferrovial SA (FRRVY.PK,FRRVF.PK) said Sunday that it has ended talks to acquire Australia's Transfield Services Ltd. (TSE.AX) after the target company rejected its sweetened takeover bid. Transfield is a provider of maintenance and construction services. Shares of Transfield are down 12 percent in Monday's trading on the Australian stock exchange following the announcement.
Ferrovial said it proposed a revised bid of A$2.00 per share, but the bid was rejected by Transfield Services. The company added that it undertook the limited due diligence available and concluded that there were a number of issues that impacted value. The revised Ferrovial bid valued Transfield at A$1.02 billion, or $830.9 million.
Further, Ferrovial said it will continue to investigate options to grow its business internationally.
In a separate statement, Transfield Services said that the revised, non-binding and conditional bid from Ferrovial continued to undervalue the company and was insufficient to gain its board's recommendation.
Diane Smith-Gander, Transfield Services Chairman said, "The Board of Transfield Services has considered Ferrovial's proposal with the company's advisers and has formed the view that the new price of $2.00 per share still does not reflect the underlying value of Transfield Services shares."
Transfield advised its shareholders not to take any action in response to the sweetened proposal from Ferrovial and said it was not expecting any further engagement with Ferrovial at this stage.
In late October, Transfield Services said it received an indicative, non-binding and conditional proposal from Ferrovial to acquire all its shares for a cash consideration of A$1.95 per share, less the value of any dividends or other distributions after October 17, 2014. However, that bid was rejected by Transfield Services.
In mid-November, Transfield Services said it executed a confidentiality agreement with Ferrovial, allowing that company to conduct limited due diligence of Transfield. The agreement also contained a standstill clause that prevented Ferrovial from trading in Transfield shares until February 28, 2015.
Ferrovial, looking to expand in Australia, had reportedly made a A$1.4 billion bid earlier for Australian construction company Leighton Holdings Ltd.'s (LEI.AX, LGTHF.PK) engineering and construction subsidiary John Holland. However, Ferrovial later dropped its bid.
Leighton Holdings said on December 11 that it has agreed to sell John Holland to China-based CCCC International Holding Ltd. or CCCI for an enterprise value of about A$1.15 billion, or $950.4 million. Leighton Holdings is majority-owned by German construction giant Hochtief AG (HOCFF.PK).
FRRVY closed Friday's trading at $19.89, up $0.17 or 0.86 percent on a volume of 200 shares.
On the Australian Securities Exchange, Transfield shares are currently trading at A$1.58, down A$0.22 or 12.01 percent on a volume of 6.52 million shares.
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