Construction giant CIMIC has made its takeover offer for mining services company Macmahon Holdings unconditional after the target company's board rejected the hostile bid.
Macmahon’s board on Monday recommended that shareholders reject the 14.5 cents a share offer, calling it inadequate and opportunistic.
“CIMIC’s offer is inadequate and the independent expert has concluded it is neither fair nor reasonable,” the company said in a statement.
“The timing of the offer is opportunistic and doesn’t reflect the improved outlook for the mining services sector.”
CIMIC – which now owns a 23.3 per cent stake in Macmahon – tabled the bid in January, a month after wrapping up its $524 million acquisition of engineering and maintenance firm UGL.
The offer represents a 32 per cent premium on Macmahon’s stock price prior to the bid, and values the company at $174 million.
Macmahon manages mines for some of the world’s biggest mining companies, including Rio Tinto and AngloGold Ashanti, but has been hit by the prolonged downturn in the sector.
CIMIC, majority-owned by Spain’s ACS Group, has flagged an overhaul of the target’s operations should it secure control of the 54-year-old Perth-based company.
It plans to delist Macmahon after acquisition.
Macmahon on Monday reported a first-half loss of $23.3 million, down from a $3.3 million profit a year earlier.
Revenue was up 7.4 per cent to $168.3 million.
The group, however, indicated a turnaround on the back of recovering commodity prices, forecasting positive earnings for the second half of the financial year.
Second biggest shareholder Forager Funds Management, which holds 7.7 per cent stake, has previously rejected CIMIC’s offer, saying it undervalued the mining services company.
MACMAHON SLIPS TO HALF-YEAR LOSS
* Net loss $23.3m vs $3.3m profit
* Revenue up 7.4pct to $168.3m
* No interim dividend, unchanged.