UGL to demerge, create two new companies

UGL have announced it will demerge to create two separate companies, a property services business and an engineering, construction, and maintenance firm.

It comes after the company issued an earnings downgrade after a massive 15% slump in share price.

According to the company "the decision to pursue a demerger follows the completion of the corporate structure review announced by UGL on 26 March".

The review included an evaluation on a number of different options for the company, including M&A, and the demerger.

It pointed to the structural separation of the property services (DTZ) and the engineering division as the best option.

Richard Leupen, UGL's managing director explained that "following the establishment of the global headquarters for DTZ in the United States, UGL increasingly saw the benefits of operationally separating DTZ and Engineering".

"A demerger will recognise the fundamentally different markets, geographic focus, and strategic requirements of the two businesses and we believe that further benefits will results from a complete separation."

UGL chairman Trevor Rowe said "we believe the demerger will enhance shareholder value over the short and long term and prove beneficial to our clients and our people".

He added that "a demerger is the next logical step for each business".

The engineering business will remain Australasian focused, and expected to qualify for the S&P/ASX200.

Demerging is slated for completion is FY2015.

Leupen will remain managing director through to the completion of the demerger. 

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