Hochtief wins Qatar as ally against ACS bid

Gulf state Qatar is to take a near 10 per cent stake in Germany's biggest builder Hochtief, adding muscle to its fight against an unwanted takeover approach from Spanish rival ACS.

Hochtief said on Monday it would issue almost 7 million new shares, raising its capital by 10 percent and driving up the cost of taking control.

Qatar Holding, an investment vehicle of the Gulf state's government, will buy 9.1 per cent of Hochtief at €57.114 cash per share, just below the current share price.

Qatar Holding said the investment was key to developing infrastructure for the 2022 World Cup in the Gulf state.

Hochtief shares extended gains in early trade after the announcement and were up 2.5 per cent at €61.62 by 0923 GMT, outperforming Frankfurt's 0.3 percent stronger mid-cap index. ACS shares were up one  per cent at €35.50.

"Reducing ACS' stake as a percentage is certainly a good defence strategy," NordLB analyst Heino Hammann said.

Last week, ACS, headed by Real Madrid soccer club President Florentino Perez, formally launched its hostile bid for Hochtief, after a 10-week battle of words with Germany's largest builder.

ACS said it would offer eight of its own shares for every five of Hochtief's, valuing the bid at €57.3 per Hochtief share, or about €4bn  for the whole company, a 7.6 per cent discount to current market prices.

Hochtief's capital increase will dilute ACS' stake to about 27 per cent from 29.9 per cent. That means it will cost the Spanish company about €200 million more to increase its holding in Hochtief beyond 50 per cent as planned, at current share prices.

"The latest developments have significantly improved Hochtief's position. ACS' original plan to get over the 30 per cent threshold without too much difficulty and gain control will now be much harder to realise," said an analyst, who asked not to be named.

Hochtief has so far explored a number of options to foil the bid, including seeking a white knight and using Australian subsidiary Leighton Holdings to appeal for Australian regulatory support, which it was denied.

At the end of September, Hochtief Chief Executive Herbert Luetkestratkoetter met with Qatar's economy minister, lobbying for support against the hostile takeover offer from ACS.

German Chancellor Angela Merkel, who has expressed disapproval of the takeover, had set up the meeting.

Hochtief also said on Monday it planned to intensify existing co- operation with Qatar and to explore opportunities for future projects.

"Qatar's strong relationship with the German state was a key element of its decision to invest in Hochtief," it said.

The move comes almost exactly one year after Qatar Holding took a 17 per cent voting stake in Europe's largest carmaker Volkswagen, underlining the more active role of Gulf states in Europe's biggest economy.

Aspokeswoman for ACS declined to comment on Hochtief's capital increase and the involvement of Qatar.

ACS' low-ball offer is expected to see few takers, but it was meant to allow the Spanish builder to increase through market purchases its current holding in Hochtief above the 30 per cent threshold that triggers a mandatory bid under German takeover rules.
 

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