Contractor UGL (UGL) has finally confirmed the $1.2 billion sale of its struggling property management and servicing arm DTZ to private equity group TPG and the appointment of Ross Taylor to replace long time CEO Richard Lupen from next November.
In two statements to the ASX yesterday that company said confirmed the sale of DTZ and the new CEO.
"The sale price represents a fair valuation for DTZ and is in the best interests of the company and its shareholders," UGL said in one statement.
After the sale is completed UGL said it "will be a dedicated engineering, construction and maintenance service provider in Australia, New Zealand and South East Asia with strong recurring revenues and a robust balance sheet”.
"On a standalone basis, UGL will employ 6,650 people with annual revenue in excess of $2.3 billion.
"Following completion of the sale, UGL will have a robust balance sheet which will position it strongly to capitalise on future growth opportunities including reinvestment in the core engineering and maintenance services business to drive organic growth as well as the flexibility to consider potential strategic growth opportunities," UGL told the ASX.
The shares ended unchanged at $6.94. That’s well below the high for the past year of $8.44, reached almost 12 months ago.
Some investors and brokers hope that with the sale proceeds and the looming change of leadership at the top of the company, UGL may now be re-rated by investors who have become wary of the poor returns and perceptions of weak governance at the top of the company.
UGL, which will reap between $1 billion and $1.05 billion in cash from the sale, was evaluating a "range of options" for the proceeds, and would update investors after the sale is completed in September, the company said.
The options could involve a takeover and or a capital return or special dividend for long suffering shareholders in the company.
The new CEO elect Ross Taylor is the CEO of engineering group Tenix.
He takes charge at UGL from November 24. UGL said Mr Taylor will receive an annual salary of $1.5 million, short term incentives worth up to $1.5 million annually, and long term incentives worth up to $5.5 million over four years.
TPG formed a consortium with Hong Kong investment manager PAG and Canada’s Ontario Teachers’ Pension Plan to buy DTZ after making an initial offer for the property group last November.
