Sembawang withdraws offer for Macmahon

Sembawang yesterday withdrew its offer to purchase Macmahon Holding’s construction business, but not before lashing out at Macmahon’s actions.

Sembawang announced on Sunday they would be withdrawing their bid for the construction business and would not be making any further offers in the future.

In what seems to be a very personal attack on Macmahon, the company oddly released a private email chain which alleges takeover discussions took place between the two company’s chief executives.

The emails appear to contradict Macmahon’s claims over the timing of Sembawang’s initial offer.

Sembawang Australia's chief executive, Ric Grosvenor went on to accuse Macmahon’s CEO Ross Carroll of providing a series of ''misleading and deceptive representations'' and “sheltering'' behind Leighton Holdings’ purchase agreement.

''This is an egregious action taken by the board of Macmahon, who appear to have something they don't wish the market to discover and is possibly due to the fact that the company was in financial distress before a capital raising,'' Grosvenor said.

''The minority shareholders of Macmahon are the losers here.''

The SMH reports that the email chain shows the two chief executives on friendlier terms on November 12 when Grosvenor told Carroll he was ''impressed'' by his performance as Macmahon's chief executive, and mentioned the possibility of Sembawang purchasing a 5 per cent share in the contractor.

On November 22, Carroll allegedly replied requesting two weeks to consider the proposal, stating that ''we have a bit going on in this space at the moment''.

To which on November 26 Grosvenor responded: ''If what you mean by 'we have a bit going on in this space at the moment', has anything to do with divesting parts of your construction operations, we would be happy to consider purchasing the whole construction business, leaving Macmahon Holdings with your contract mining business."

According to the email chain, the next reply from Carroll, appears to be on December 7, when he said: ''It will become clear on construction sometime next week but unfortunately we won't be able to do anything with you in that space.''

On December 12 Macmahon announced it had entered into a trading halt and that a capital raising would take place as part of an agreement to sell the majority of its construction business to its largest share holder Leighton Holdings.

Macmahon denied Sembawang access to complete due diligence while its purchase agreement with Leighton still stands.

Australian Mining reported Sembawang’s offer last Thursday stood at $38 million, increased from the initial $25 million bid.

Sembawang also offered to beat Leighton's separate offer, to acquire major projects within the construction business, by $5 million.

Sembawang chief executive Richard Grosvenor said in a statement released last week that Sembawang had approached MacMahon on November 26 regarding the potential purchase of its construction business, news.com.au reported.

Macmahon denied the allegations, saying “the only proposal received from Sembawang to date is its unsolicited, non-binding, incomplete and conditional proposal” sent on January 3, 2013.

''The Sembawang offer says what it says and means what it means,'' Grosvenor said in a statement.

However, Leighton had already agreed to purchase Macmahon’s construction assets, signing an  Asset Purchase Agreement (APA) on Christmas Eve.

The sale of the business to Leighton had been expected to be effective from December 31, although the deal was subject to shareholder approval at a meeting in February, the Australian reported.

Australian Mining last month reported Macmahon's construction business was being put up for sale in an effort to shift the company’s focus towards becoming a fully fledged mining contractor.

*Update*

Following this morning’s reports that Sembawang had revoked its offer to purchase Macmahon Holdings’ construction arm, the company has announced Part B of its offer still remains in play.

In a letter addressed to Ross Carroll CEO of Macmahon Holdings, Sembawang’s CEO Richard Grosvenor reiterates that the company “intends to enter into the transaction under the exact same terms as those proposed by Leighton, however… offering a further AUD$5 million.”

Grosvenor goes on to request once again a due diligence period which would end on January 31.

The offer is open until 5pm Perth time tomorrow.

Macmahon Holdings was not available for comment at the time of publication.

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