Building and engineering giant UGL is set to hive off its global property services business to a private equity consortium in a move that will see the company focus on core business in engineering, construction and maintenance services.
And the company has announced a new Chief Executive Officer to replace Richard Leupen, who will leave the business later this year.
In a statement to the Australian Stock Exchange on Monday, UGL said it had entered into an all cash agreement to sell its global property services business DTZ to a consortium comprising TPG Capital, PAG Asia Capital and Ontario Teachers’ Pension Plan for an enterprise value of $1.215 billion.
The move affects a structural separation the company has been pursuing for at least eighteen months amid a belief DTZ’s focus in terms of markets, geography and strategic requirements differed substantially from that of UGL’s other business segments and will leave UGL as a dedicated construction, engineering and maintenance services outfit revolving around rail, infrastructure and resource projects throughout Australia and South-East Asia.
The company has also appointed former Lend Lease veteran Ross Taylor as its new Managing Director and Chief Executive Officer.
Taylor will take over on November 24 from Richard Leupen, who in recent times has been forced to defend his fourteen year tenure at the company amid ongoing problems in the group’s engineering business, and who was widely tipped to leave following the demerger.
A Lend Lease veteran of 24 years, including a stint as Group Chief Operating Officer, Taylor was Group CEO at resource, electricity and water engineering and construction outfit Tenix before being appointed to head UGL’s engineering business earlier this month.
UGL Chairman Trevor Rowe welcomed the latest appointment.
“Ross has extensive experience in driving operational performance, creating value for both shareholders and clients,” Rowe said.
“The Board believes this focus will strongly position UGL’s Engineering business as a market leader as the infrastructure investment cycle improves in the medium term with a number of significant opportunities across the rail, power and transport systems sectors emerging.”
Completion of the sale, which is expected to net around $1.0-$1.05 billion after capital gains tax, transaction costs and other sale adjustments, is expected to be finalised by the end of September.
Whilst speculation in media reports centres around acquisition of businesses discarded by Leighton, a merger with peer Transfield Services or a capital return to shareholders, the company merely said it was evaluating options for use of the sale proceeds and would update the market on this following completion of the transaction.
After the sale, UGL will have a workforce of around 6,650 and annual revenues of more than $2.3 billion.