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UPDATE 2-Chairman of Australia's Leighton quits in row with Hochtief
* Stephen Johns, two non-exec directors quit
* "Breakdown of relations with Hochtief" cited
* Hochtief says supports remaining management team
* Leighton to meet at weekend to elect new chairman
* Leighton shares hit near two-month low (Rewrites with Hochtief comment, letter of resignation)
By Maggie Lu Yueyang and Victoria Bryan
SYDNEY/FRANKFURT, March 22 (Reuters) - The chairman of Australia's Leighton Holdings Ltd has quit in a row with majority owner Hochtief AG, saying he felt the German builder no longer supported his company's independence.
Two non-executive directors also walked away after what all three "perceived to be a breakdown in relations with the major shareholder Hochtief," Leighton said in a statement on Friday.
The exit of Chairman Stephen Johns and non-executive directors Wayne Osborn and Ian Macfarlane sent shares in Australia's biggest construction company down almost 7 percent to near a two-month low.
The departures also highlighted conflict with a director appointed by Hochtief's parent, Spanish group ACS.
In his letter of resignation, Johns said there had been conflict with Hochtief chief Marcelino Fernandez Verdes, a close confidant of ACS CEO and Chairman Florentino Perez.
ACS has strengthened its control over Hochtief's management since it acquired a majority stake in Germany's largest builder in 2011.
Verdes was appointed CEO of Hochtief in November to lead a strategy review and has been on the Leighton board since October.
Johns said Verdes had interfered in the appointment of an independent director, which subsequently did not go ahead, and that Verdes then requested his resignation as chairman.
"These actions gave rise to serious concerns that Hochtief no longer supported the important principle of board independence," Johns wrote.
In a later statement, issued after it became aware the letters of resignation had been made available to the media, Leighton said it did not agree with the conclusions drawn by the resigning directors.
"There have been a series of events in recent months which are open to interpretation," it said, adding the remaining Australian directors had no "specific information" that Hochtief no longer supported the independence of Leighton's board.
Hochtief, for its part, said it was in full support of the remaining Leighton management, including Chief Executive Hamish Gordon Tyrwhitt and finance chief Peter Allan Gregg.
"Hochtief appreciates having independent members on the Leighton Board," a spokesman told Reuters.
ACS declined to comment.
Leighton's share price fall wiped more than $527 million from the value of the $7.6 billion company. Market regulator the Australian Securities and Investments Commission said it was aware of Leighton's share movement and had talked with the stock exchange, but declined to give more details.
Some analysts said the stock's reaction reflected the loss of a respected independent chairman and the risk that minority shareholders would be less vocally represented.
The resignations leave the board with two independent directors, three non-executives, plus the CEO and CFO.
"Stephen Johns is a highly respected chairman, and his departure will be taken negatively," said an analyst who declined to be identified because of the sensitivity of the subject.
Leighton operates under an independent board and management according to the arrangement between the company and Hochtief, which owns 53.4 percent of Leighton, the company said, declining to give further details.
"There has been a lot of changes in the Hochtief appointees, just a whole (bunch) of new people coming to the board," said Shane Delphine, an investment manager at Karara Capital, which owns shares in Leighton.
"They are more aligned to the old Hochtief management," he said, referring to the three directors who had resigned.
Leighton shares closed down 6.9 percent at A$20.20, after dropping as low as A$19.51, their lowest in nearly two months.
Leighton said its board would meet this weekend to elect a new chairman. ($1 = 0.9580 Australian dollars) (Additional reporting by Matthias Inverardi in Frankfurt and Clare Kane in Madrid; Editing by Daniel Magnowski and David Holmes)
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