* Former Leighton CEO resigns after Hochtief offer
* Move to up stake from 59 pct now valued at $1.08 bln
* German firm names two new directors as seeks 74 pct stake
(Adds comment from new CEO, Leighton chairman)
By Maggie Lu Yueyang
SYDNEY, March 13 German builder Hochtief AG
has installed its chief executive at the helm of
majority-owned Leighton Holdings Ltd and claimed more
seats in the boardroom, cementing its grip on the Australian
company that supplies much of its profit.
Hochtief also said on Thursday it has marginally sweetened a
bid to increase its stake in Australia's biggest builder to
about 74 percent from just under 59 percent currently. It's
seeking to push through a restructuring strategy at Leighton
that echoes its own cost cuts and non-core asset sales,
masterminded by Hochtief's controlling shareholder, ACS
Incoming CEO Marcelino Fernandez Verdes replaces Hamish
Tyrwhitt, who resigned after Hochtief announced plans to raise
its holding. A Spanish engineer, named to the top Hochtief job
by ACS in 2012, Verdes on Thursday described Leighton as the
German company's "main asset".
"It is very important for Hochtief to have in Leighton the
similar strategy," Verdes said at a media briefing in Sydney. "I
am going to spend all the necessary time that is needed in
Leighton reported a 30 percent jump in its full-year profits
last month, benefiting from a building recovery in Australia,
and also has a strong pipeline of projects in Asia.
The changes come a year after Leighton's former chairman
quit in a row with Hochtief, saying he felt the German builder
no longer supported his company's independence.
The move to increase Hochtief's stake also follows the gradual
acquisition strategy adopted by ACS at the German firm in its
drive to become a major global player in the construction
Under its revised offer, Hochtief said it will pay A$1.205
billion ($1.08 billion) to raise its, up 4 percent in total
value terms from the A$1.155 billion it first offered on Monday.
The offer is subject to the approval of Australia's Foreign
Investment Review Board.
Leighton's chief financial officer Peter Gregg also stepped
down, Hochtief said, without naming a successor. The pair also
resigned from Leighton's board.
Leighton shares dropped 0.8 percent after the announcement
to A$22.07 as of 0327 GMT. Morningstar analyst Ross Macmillan
said the market was disappointed as Tyrwhitt was viewed as
having done a good job for Leighton.
"Most of the market expected either Hamish or Peter to be
retained, at least one of them. Most people would expect they
would be kept on for at least another 12 months to two years,"
Speaking at the briefing in Sydney, Leighton's current
chairman Robert Humphris said the management change was in line
with Hochtief's plans to raise its stake.
"If you read Hochtief's proportional takeover offer, they
made it quite clear in that as part of strategy, they wanted to
get increased representation on the board and management
changes," he told reporters.
The German company said it has appointed two new
representatives on the Australian firm's 10-member board in
addition to its two existing directors. Three current
independent directors will leave later in the year, the company
Under terms of the revised offer, Hochtief said it would
offer A$22.50 cash per share to acquire 3 out of every 8 shares
it doesn't already own in Leighton, up from Monday's A$22.15
offer. Hochtief said Leighton's independent directors
unanimously support the revised offer, and intend to recommend
shareholders accept the offer if there is no superior proposal.
Chairman Humphris said independent directors had pressed for
a full takeover offer. "We pressed hard for a full takeover
because we thought it will resolve all the issues for everybody,
but whilst we pressed hard we didn't press for very long,
because it was quite clear that was not a possibility," he said.
Verdes said in a telephone interview with Reuters earlier
this week that Hochtief was only aiming for 74 percent control
partly because it wanted to "avoid possible disruptions into our
aligned finance arrangements". He didn't disclose details of the
Many of Leighton's debt facilities have a covenant which
requires the debt to be refinanced if another company takes 75
percent control, Morningstar's Macmillan said.
($1 = 1.1146 Australian Dollars)
(Reporting by Maggie Lu Yueyang; Editing by Kenneth Maxwell)