Italian group Webuild has announced that it has reached a conditional agreement to acquire the entire share capital of the Australian company Clough Ltd from South Africa’s Murray & Roberts. Webuild was born in 2020 from Salini Impregilo, is a leading global player in the construction of large, complex projects for sustainable mobility (rail, metro, bridges, roads, ports), hydropower (dams, power plants), water (treatment and desalination plants, wastewater management, irrigation dams) and green buildings (civil and industrial buildings, airports, stadiums, hospitals).
Henry Laas, Murray & Roberts Group Chief Executive, comments: “The Group reviewed a number of strategic options to address Clough’s working capital needs, which have become increasingly urgent. Having reviewed all available alternatives and based on the above background, the board of directors of Murray & Roberts concluded that a transaction with Webuild was the preferred course of action.”
Webuild has a history of working with Clough on major projects, including its joint venture with Clough on Snowy 2.0, a hydropower project in Eastern Australia and its participation with Clough (and other members) in Regionerate Rail, a consortium appointed as preferred bidder for the development of the Gowrie to Kagaru section of Inland Rail. In conjunction with the potential transaction, Webuild will establish an interim loan facility of A$30 million for the benefit of Clough, which will allow Clough to continue trading until closing of the potential transaction.
“This is a critical step, as the ERI platform is in immediate need of a significant cash injection to service their order book and commercial commitments, which Murray & Roberts is not able to provide,” Laas continued.
Clough is among Australia’s main companies in the engineering and construction sector, with approximately 2,500 employees. Founded in Perth in 1919, Clough is wholly owned by Murray & Roberts of South Africa. It provides sustainable and innovative solutions in the design, construction and maintenance of plants and infrastructure in the energy, resources and infrastructure sectors. Its landmark projects include the first high-rise in Perth, and the first major underground freeway tunnel in Western Australia. Recent mining projects include the Ore Handling Plant for BHP’s A$3.6 billion South Flank project.
At June 30, 2022, Clough had an order backlog of approximately €2.1 billion, and approximately €2.7 billion worth of projects for which it is the preferred bidder. Both the backlog and preferred bids are mainly concentrated in Australia and North America. Revenues for the 2022 financial year are approximately €1 billion. In addition, the company ended 2022 with balance sheet free of financial debt.
Webuild will support Clough’s financial reorganisation with the aim of turning it into the Group’s platform in Australia, a strategic market with strong growth potential as infrastructure investments are expected to reach more than €300 billion in the 2022-2025 period. In Australia, Webuild’s order book and preferred bids total nearly €9 billion.
The transaction would enable Webuild to:
- strengthen its organisational, engineering and workforce structure in Australia, instrumental to the execution of its order backlog and commercial plan;
- bolster its local presence in a number of major Australian states, such as Western Australia and Queensland, adding to Webuild’s established presence in New South Wales and Victoria;
- benefit from scale and significant synergies by enhancing Clough’s central resources specialised in commercial planning, bid preparation, human resources management, procurement management, administration, finance and control;
- expand and diversify Webuild’s activities in terms of operating segments, with Clough’s good market positioning and strong technical expertise in sectors such as energy, installations, and defence.
The transaction would have Webuild take over minority stakes in projects in Australia carried out in partnership with Clough, including Snowy 2.0 and Inland Rail. The agreement is subject, inter alia, to the positive outcome of the due diligence (to be conducted promptly on Clough), all the necessary approvals from the relevant authorities, clients’ confirmation that Clough material contracts will continue unimpaired after the closing of the acquisition, and approval by the Murray & Roberts Holding Limited shareholders’ assembly. Due diligence has already commenced, whose agreed scope will address standard legal, accounting, tax and operational matters, and will review the economic and financial forecasts made available to Webuild pending the negotiation of the transaction.
