The prospect of Leighton Holdings making a move on Macmahon Holdings has risen after the two contractors extended their memorandum of understanding covering their partnering on large infrastructure projects.
The extension of the agreement was confirmed by announcements to the ASX yesterday
The two companies have dropped a requirement in the original agreement that Leighton had to obtain Macmahon’s written consent before extending its shareholding in the latter beyond 19.9%.
That was the standstill section of the agreement that halted Leighton’s attempt to built a substantial, but dominant stake in its rival.
Leighton now holds 19% of Macmahon and has been widely tipped to be aiming to extend the stake to 30%, which was the aim of Leighton when it originally moved on Macmahon two years ago.
Macmahon said the new MOU was effective from November 2, with no termination date.
Macmahon said the original MOU, signed in November 2007, had improved Macmahon’s ability to win large infrastructure projects both domestically and offshore.
Macmahon’s chief executive, Nick Bowen, said both companies benefited from the relationship.
He said that the agreement allows Macmahon to continue to increase its ability to win additional large infrastructure projects in the domestic and international markets.
"By joint venturing on construction projects with companies owned by Leighton Holdings, we will add to our skill set and further develop our expertise, particularly in relation to large scale and technically complex projects.
"The renewal of this agreement is a positive step and shows that both Leighton and Macmahon are benefiting from the MOU. This continuation displays the commitment to work together on an ongoing basis to achieve excellent outcomes and add value to both companies.
"Furthermore, a bigger, stronger and expanding Macmahon is not only beneficial for our shareholders but is also a positive for Leighton’s shareholders," Mr Bowen said.
Leighton shares were up just over 1% yesterday to $34.84, while Macmahon shares rose more than 6% or 4 c to 57.5c in anticipating that Leighton would resume buying.
And, still in the same sector, engineering and maintenance company United Group Ltd has officially changed its name UGL Ltd, following shareholder approval at last week’s AGM.
"The renaming of the company to a single recognised umbrella brand is important for a business which incorporates so many well known but diversified trading entities assembled through an aggressive growth and acquisition strategy these past 10 years," chief executive Richard Leupen said in a statement.
