Gulf state Qatar is to take a stake in Hochtief, backing Germany’s largest builder in its fight against an unwanted takeover approach from Spanish rival ACS.
Hochtief said on Monday it would issue 6,999,999 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 percent at 57.114 euros cash per share, just below the current share price.
Hochtief shares extended gains in early trade after the announcement, and were up 2.5 percent at 61.62 euros by 0923 GMT, outperforming Frankfurt’s 0.3 percent stronger mid cap index. ACS shares were up 1 percent at 35.50 euros.
“There are not that many options left for Hochtief so this is most definitely a positive and promising step in the right direction,” Nord Landesbank analyst Heino Hammann said.
“Reducing ACS’ stake as a percentage is certainly a good defence strategy,” he added.
Last week, ACS, headed by Real Madrid soccer club President Florentino Perez, formally launched its 4bn euro ($5.4bn) 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, a deliberately low priced bid that is unchanged from ACS’s initial proposal made in mid September.
At the current share price this would value ACS’ bid at 57.3 euros per Hochtief share, a 7.6 percent discount to Hochtief’s current market price.
ACS’ low ball offer is expected to see few takers, but the bid’s existence allows the Spanish to increase through market purchases its current 29.9 percent holding in Hochtief above the 30 percent threshold that triggers a mandatory bid under German takeover rules.
The offer got the regulatory go ahead from German financial watchdog BaFin last week. Under German law, ACS had to show BaFin that it could finance the takeover even if more investors than expected accept the offer.
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 takeove, had set up the meeting.
Hochtief also said on Monday it planned to intensify existing cooperation to Qatar and to explore opportunities for future projects.
A spokeswoman for ACS declined to comment on Hochtief’s capital increase and the involvement of Qatar.
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