Leighton Holdings announced in late December it has agreed to purchase the Welspun Group's 39.9 % stake in its Indian-based joint venture, Leighton Welspun for US$99 million to achieve 100 % ownership of this business.
According to the press release, this opportunity arose from the decision by Welspun to reposition its infrastructure business and to focus on its core businesses (including textiles, pipes, energy and steel).
Leighton will rename the business Leighton India. It will continue to report through Leighton Asia, India and Offshore under LAIO Managing Director Ian Edwards.
The joint venture, established in 2010, aimed to provide a strategic partnership that could capitalise on opportunities in the Indian infrastructure sector especially Public Private Partnerships. Leighton continues to see strong long-term prospects in the Indian market.
As a part of the Business Transformation program currently under way across the Leighton Group, LAIO will take the opportunity provided by the move to 100 % control of Leighton India to undertake a review of its operations and consider integrating several business units to both lower costs and provide greater business opportunities.
Leighton's Business Transformation program aims to strengthen the Leighton's balance sheet, improve efficiency and lower costs.
The transaction will be recognised in fiscal year 2013 and have a negative impact of approximately A$70 million on net profit after tax. Leighton's 2013 underlying net profit after tax will not be impacted by this transaction and the forecast remains in the range of A$520 million to A$600 million. The transaction will complete in the first quarter of 2014 once the procedural conditions are completed.