Interesting article - mention of CLO as a potential bite for LEI. Has a ring of "potential" about it considering CLO's demolished share price and work focus in oil 7 gas where Leighton is a virtual non-player.
I dont hold any stock mentioned here.
acturtle
Rumours build about Leighton engineering a stranglehold December 12 2002 By Scott Rochfort Sydney
Leighton Holdings is within striking distance of gaining a stranglehold on the non-residential and infrastructure construction market across Australia for a song.
Speculation has mounted that Australia's largest contractor will announce within days its acquisition of Belgiorno-Nettis family-owned Transfield Construction.
The acquisition will not include the publicly listed Transfield Services or Transfield's stakes in the Perisher Blue ski resort and the Sydney Harbour Tunnel.
Talk of the acquisition comes just weeks after Leighton subsidiary John Holland said it hoped to complete due diligence on the Walter Construction Group by the end of December.
Each acquisition is estimated at around $40 million, with Transfield and Walter having an estimated $500 million to $700 million and $850 million of work in hand respectively. Leighton has an estimated $9.3 billion of work in hand.
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More significantly, both acquisitions would result in the removal of two of Leighton's competitors as construction firms jockey for the anticipated boom in non-residential and infrastructure construction, which is expected to last until 2006.
"If there were any such deal, it will be looked at very closely," Australian Competition and Consumer Commission chairman Allan Fels said yesterday.
However, Transfield and Leighton have played down the takeover talk. "I've heard those rumours too," a Transfield spokesman said.
Yet, Transfield confirmed a leaflet circulated to staff two weeks ago confirmed Transfield was still in talks with Leighton. "There's been no outcome yet. I guess the rumours are being put around by our competitors," the spokesman said.
Leighton's main rivals, if the deal goes ahead, will include Bovis Lend Lease, Baulderstone Hornibrook, Abigroup and Multiplex.
Leighton declined to detail how far negotiations had progressed.
"It's a bit out of the blue for me. I can't confirm anything, I'm afraid," a Leighton spokesman said.
Speculation has also surfaced over the past month that Leighton may look into a possible takeover of Perth-based Clough Engineering, whose share price has barely recovered since it issued a profit warning last month.
With Leighton already eyeing the lucrative oil and gas projects on the North-West Shelf, some analysts have speculated that the troubled Clough could be an excellent opportunity for Leighton to leapfrog into oil and gas, where it has relatively little expertise.
Acquisition aside, analysts say another ace up Leighton's sleeve is its healthy cash position in relation to other contractors, many of which are still struggling to turn a profit after the post-Olympic building downturn.
Leighton had $588 million in the bank at the end of last financial year. The cash gives Leighton more leverage to secure tenders by taking equity stakes in projects, then selling them on completion.
"To play in this game you need pretty deep pockets, and Leighton Holdings is clubbing everyone on the head with their balance sheet," one analyst said.
Rival Abigroup, in contrast, had $22.9 million in cash at the end of 2001-02.
Leighton closed 14 cents higher at $9.39
CLO Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
