Watpac directors slammed by Sandon Capital for recommending Besix offer

Watpac directors slammed by Sandon Capital for recommending Besix offer

Source: The Australian Financial Review.
By: Larry Schlesinger.

Activist investor Sandon Capital has slammed the independent directors of listed construction firm Watpac for recommending shareholders sell out to Belgian firm Besix at 92¢ a share.

Besix’s ownership of Watpac has nudged up to 50 per cent from almost 40 per cent since making its $102 million all-cash offer on October 29 to acquire all remaining Watpac shares by December 3. The off-market takeover also allows shareholders to sell to Besix on-market through the ASX.

It’s the second attempt Besix has made to gain control of Watpac, after a proportional takeover, also at 92c a share, earlier in the year via a scheme of arrangement (where Besix would lift its take to 64 per cent from 28 per cent) failed to gain enough support from shareholders.

This followed a campaign by ASX-listed Sandon Capital, which manages entities holding about 3.2 per cent of Watpac shares, to reject the offer because it did not represent good value for shareholders.

Sandon founder Gabriel Radzyminski called Besix’s latest approach “clever tactics” but said his firm could not work out why Watpac’s independent directors had recommended it to shareholders with chairman Peter Watson calling it “an attractive outcome”.

“The offer is at the same price as the proportional takeover despite the fact that Watpac has won better quality contracts in the last 7-8 months and improved its earnings,” said Mr Radzyminski.

Improved earnings

He pointed to Watpac’s own full-year results presentation published in August which noted “substantially improved earnings” and “key project wins” including work on expanding Adelaide Airport, a number of major hospital projects, the North Queensland Stadium project and the contract to deliver the Melbourne Data Centre.

“If Besix thought it was getting a bargain with its initial offer, it’s getting an even better bargain now,” said Mr Radzyminski. “Shame on the board.”

When Besix made its initial approach in February to acquire 64 per cent of Watpac, it argued that taking control of Watpac would give the Australian company access to its technical capabilities, scale and balance-sheet strength and help Watpac win bigger and more complex projects.

At the time Besix CEO chief executive Rick Vandenberghe ruled out a 100 per cent takeover because it wanted to “keep the Australian connection”.

The 109-year-old Belgian company’s signature project is the world’s tallest building, the 828-metre Burj Khalifa tower in Dubai which it completed in 2009, alongside major residential, commercial, infrastructure, marine and waste-management projects in mainly Europe and the Middle East.

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