http://au.biz.yahoo.com//070903/19/1dpv8.html
Monday September 3, 10:27 AM
UPDATE 1-Australia's Leighton buys Al Habtoor stake
(Adds detail, background, shares)
SYDNEY, Sept 3 (Reuters) - Australian construction firm
Leighton Holdings Ltd (ASX: LEI.ax) said on Monday it will pay about
A$870 million ($707 million) for a 45 percent stake in
Dubai-based Al Habtoor Engineering as it continues to expand in
the lucrative Gulf market.
Leighton, about 54 percent owned by German construction
group Hochtief HOTG.DE, said the deal with Al Habtoor, one of
the Middle East's biggest engineering firms, would be accretive
to earnings per share for the 2007/08 business year.
"We believe there is significant upside over the medium
term and we are excited about further prospects in the Gulf,"
Leighton Chief Financial Officer Scott Charlton said in a
statement.
Shares in Leighton opened up 6 percent following the
announcement. The stock was trading up 5.5 percent at A$46.25
by 0024 GMT, against a wider market up 0.5 percent.
Under the cash and debt funded deal, the company's
Southeast Asia, Indian and Gulf subsidiary Leighton
International will merge its operations with Al Habtoor. The
combined entity will have a total of A$4.4 billion of work in
hand.
Leighton, which had previously flagged a possible tie-up
with Al Habtoor, has been targeting expansion in the lucrative
Gulf construction market.
It is already building a A$518 million equestrian centre in
Qatar and is part of the A$1 billion-plus City of Arabia
project in Dubai. Leighton won its largest contract to date in
the Gulf on Aug. 14 with a $550 million highway contract in Abu
Dhabi, the capital of the United Arab Emirates federation.
Leighton said its Al Habtoor investment would be funded by
A$350 million in cash and A$520 million in non-recourse debt,
with the debt funding provided by Abu Dhabi Commercial Bank
ADCB.AD, EFIC, HSBC HSBA.L, Mashreqbank MASB.DU and the
Royal Bank of Scotland RBS.L.
Leighton also said on Monday that it planned to move the
headquarters of Leighton International from Kuala Lumpur to
Dubai as part of the increased Gulf focus.
Al Habtoor Engineering was established in Dubai in 1970 and
has more than 25,000 employees. Past projects include building
Dubai's sail-shaped Burj Al Arab, the world's tallest hotel.
Links between Leighton and Al Habtoor go back to 1986, when
the two won a contract for Arabian Gulf University student
housing construction.
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