Watpac (ASX:WTP) operates a national construction business with a broad client base spanning the commercial, education, health and science, residential, defence, and sports sectors. The company also has a civil and mining construction contract business operating in Western Australia.

The Opportunity

By 2017, WTP had suffered a number of operational missteps in its core construction business and the civil and mining business continued to lose work despite a pickup in civil and mining construction.
The share price was trading at a significant discount to the net assets of the company.

Sandon Capital believed that even in the absence of change, WTP shares were significantly undervalued.  It also believed that a changes in WTP’s operational strategy and capital management strategy would lead to improved performance and a share market rerating.


February 2017




In March 2018 Sandon Capital published an investment thesis calling for:

(1) WTP’s significant surplus cash (in excess of A$35m) to be returned to its shareholders through a share buyback given the current WTP share price relative to its net tangible asset value.

(2) WTP to investigate merging the civil and mining construction business with another mining contractor by way of a scrip-based deal that would allow WTP shareholders to retain exposure to the mining services upcycle.

That same month, after the publication of the investment thesis, WTP announced that the Board would conduct a comprehensive review of the company’s civil and mining business, including exploring sale options for the business and/or its assets, either in part or whole. In late March, Belgium construction giant, BESIX, announced its intention to acquire a two-thirds majority stake in WTP by way of a proportional takeover offer for 1 in every 2 shares owned by shareholders other than BESIX.

In May 2018, Sandon Capital released a presentation urging shareholders to vote AGAINST the BESIX/Watpac Scheme of Arrangement.  Sandon Capital believed BESIX was taking advantage of WTP’s current poor performance and weak share price and, as existing shareholders with Board representation already, BESIX had a poor track record of improving WTP’s fortunes.

Following Sandon Capital’s high profile, public campaign, shareholders voted against the scheme, a rare instance that a Board approved Scheme of Arrangement was voted down by shareholders.

In October 2018, BESIX returned with a full takeover offer as opposed to the proportional offer previously.  The Board recommended this takeover to shareholders.

Whilst Sandon Capital believed that the offer still undervalued the company, it did not want to be a minority shareholder where the majority shareholder had different motivations. In November 2018 Sandon Capital accepted the takeover offer.


Sandon Capital launched a public campaign calling for operational improvement and a return of capital to shareholders via a buyback. When a proportional takeover offer by BESIX presented itself, Sandon Capital successfully campaigned against what it believed to be an unattractive offer. When a revised offer was recommended by the WTP Board, Sandon Capital accepted the offer.

Current View

In November 2018 Sandon accepted BESIX’s takeover offer of $0.92 per share for WTP.

Related Reads

Past performance is not indicative of future performance. The content of these case studies constitutes the views and opinions of Sandon Capital. They have been prepared without taking into account the objectives, financial situation or needs of any particular individual. The case studies do not constitute advice.


Sandon Capital’s Presentation to shareholders published in March 2018


Sandon Capital’s presentation to shareholders to vote AGAINST the BESIX scheme published in May 2018

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