(Recasts to say sale is likely canceled, adds investor comment)
By Byron Kaye
SYDNEY May 19 Australian engineering and
property management company UGL Ltd will likely shelve
the planned A$1.2 billion ($1.12 billion) sale of its property
services arm after it received just one binding offer for the
asset, a source familiar with the process told Reuters.
Sydney-based UGL will also probably cancel an earlier plan
to demerge its DTZ global real estate services business by
listing its shares and will instead concentrate on improving the
unit's performance, the source said on Monday.
Debt-laden UGL had expected four bids from private equity
companies for DTZ by a deadline of May 16, the source said, but
the only confirmed final bidder was TPG Capital Management LP
TPG.UL], the source said, without disclosing a bid price.
The source, who could not be identified because the process
was not public, said the sale would likely be in doubt if TPG's
offer was below A$1.2 billion and that UGL was unlikely to
return to its plan, announced nine months ago, to spin DTZ off
as a separate listed company.
Shares in Sydney-based UGL fell as much as 14 percent and
were down 10 percent at A$6.84 in afternoon trading.
"That is the sensible thing to do," said Simon Marais,
managing director of fund manager Allan Gray, which holds 12
percent of UGL shares, referring to a possible decision to pull
the sale. "You shouldn't sell something just because."
In a statement to the Australian Securities Exchange in
response to a question about the share price fall, UGL company
secretary Murry McArdle maintained the company was still in
confidential talks with third parties about selling the asset.
"Discussions with these third parties are yet to reach a
conclusion...There is no guarantee this process will result in a
binding offer for DTZ," McArdle said.
UGL has struggled with high debt levels and falling profit
as its main engineering services division experiences declining
revenue as a result of a mining slowing affecting Australia.
In February, DTZ helped lift UGL's net profit for the six
months to Dec. 31, 2013, prompting UGL to say it might sell DTZ
in a private sale instead.
($1 = 1.0680 Australian dollars)
(Reporting by Byron Kaye; Editing by Kenneth Maxwell and Matt