Leighton and certain Apollo funds agree to form 50:50 Services investment partnership

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Leighton and certain Apollo funds agree to form 50:50 Services investment partnership

Leighton Holdings has entered a binding agreement with funds managed by affiliates of Apollo Global Management, to form a 50:50 investment partnership comprising the merged operations and maintenance services businesses.

The proposed merger comprises the following services:

  • Thiess Services which includes: Communications, Energy Solutions, Asset and Infrastructure Services, and Environmental Services.
  • Leighton Contractors Services which includes: Visionstream and Infrastructure Services.

The transaction has a price which represents an enterprise value for 100% of the assets of A$1,075 million, subject to certain adjustments. It also involves an approximately A$700 million in cash proceeds which will reduce Leighton Holdings' gearing by around 10%.

The services business will be one of the largest services firms in Australia with combined 2014 revenue of more than A$2.2 billion, approximately A$4.02 billion of work in hand and approximately 6,400 skilled employees. Leighton and Apollo believe the business will be best positioned as a focused, independent business, led by a dedicated and experienced board and executive team.

The services business will provide a comprehensive range of operational maintenance, design and construction, remediation, and asset and facilities management services to clients across the resources, telecommunications, transport, energy, water, health and industrial sectors.

Leighton Holdings Executive Chairman and Chief Executive Officer Marcelino Fernández Verdes said:

"As part of the Strategic Review announced in June 2014, we have undertaken a thorough analysis of our Services Business to ensure we maximise opportunities in the growing industrial and civil infrastructure services sector".

"By choosing to partner with funds managed by Apollo, a leading global investment management firm, we gain access to Apollo's expertise in creating a single, integrated and efficient business which will be better able to compete in the Australian market place. Moreover, we will continue to have exposure to the growing services market with its longer-term contracts and steady cash flows, and we will be positioned to allocate funds to the improvement in our gearing and balance sheet, and to the financing of future growth."

Steve Martinez, Senior Partner and Head of Asia-Pacific for Apollo said,

"We are very excited to invest in two great businesses in partnership with Leighton. We look forward to working with the Services Business team to grow a world-class industrial and civil services company focused on continuing to deliver extraordinary results to customers."

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