Leighton Holdings had entered a binding agreement for the sale of John Holland to China Communications Construction Company International Holding Limited (CCCI).
CCCI is a wholly-owned subsidiary of China Communications Construction Company (CCCC), the fourth largest construction company in the world by revenue. CCCC has a market capitalisation of approximately A$23.5 billion and is listed on the Hong Kong and Shanghai stock exchanges.
CCCI will purchase John Holland for an enterprise valuation of approximately A$1.15 billion (US$947.2 million) subject to certain adjustments.
The indicative impact on Leighton Holdings is:
The sale is subject to customary approvals including by the Foreign Investment Review Board.
Leighton Holdings acquired a 70 percent shareholding in John Holland in February 2000, which increased to 100% in 2007.
Leighton Holdings's assets are being put up for sale as part of a new value creation strategy of the firm, following a takeover bid this year by Hochtief. Leighton Holdings's 70% owner Hochtief took over the Australian company's management in March with a view to streamlining its myriad businesses, slashing costs and increasing profitability. Hochtief is controlled by Spain's ACS Group.
Leighton Holdings Executive Chairman and Chief Executive Officer Marcelino Fernández Verdes stated:
"In June 2014 we announced that, as part of our Strategic Review we were analysing options for our Services, Property and John Holland businesses, including the potential divestment of, or introduction of new partners to, these businesses. The divestment of John Holland demonstrates the progress we have made with our Strategic Review initiatives over the past six months to strengthen the balance sheet, streamline the operating model and improve project delivery.
"Following a comprehensive and extensive global sale process we have achieved a value for John Holland which reflects its position as one of the country's leading engineering and construction companies. The divestment of John Holland supports our focus on further reducing gearing and strengthening our balance sheet so that we can be sustainably competitive. Proceeds will also be used to finance future growth, particularly in PPPs2."