CIMIC reveals buyer of Thiess stake

CIMIC Group has agreed to divest a 50 per cent interest in mining services provider Thiess to Elliott Advisors.

The 50 per cent interest is valued at $4.3 billion, based on the 100 per cent value of Thiess.

Elliott Advisors, which is one of the oldest fund managers of its kind, manages more than $US40 billion ($56 billion) in assets in Australia and globally.

Under the agreement, CIMIC will retain the remaining 50 per cent equity interest in Thiess with it to jointly control the mining services company alongside Elliott Advisors.

CIMIC keeps ownership of minerals processing and infrastructure solution company Sedgman as part of its 50 per cent share in Thiess.

The transaction is expected to generate a pre-tax gain of $2.2 billion for CIMIC, and a post-tax gain of around $1.4 billion.

CIMIC noted that the transaction would strengthen its balance sheet by generating realised cash proceeds of $1.7 to $1.9 billion on completion.

The company will have an option to repurchase the 50 per cent interest from Elliott at the lower of the agreed sale price or fair market value between three to six years after the sale.

“The sale agreement reflects Thiess’ ongoing strategic importance as a core activity for CIMIC,” CIMIC Group executive chairman Marcelino Fernández Verdes said.

“It capitalises on the robust outlook for the mining sector and, together with Elliott, we will pursue market opportunities in line with Thiess’ growth and diversification strategy.”

Elliott Advisors made headlines in the mining sector during 2017 and 2018 when it launched a campaign for BHP to demerge its United States petroleum assets.

The fund manager, which holds a stake of around 5 per cent in BHP, also suggested BHP should change its dual-listed company structure and operate as a London-based and listed company.

This led to back and forth discussion between Elliott and then BHP chief executive officer Andrew McKenzie until Elliott eventually backed off its view on the company needing a complete restructure, saying it was open to the company retaining its dual London and Australian listings.

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