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MACMAHON HOLDINGS LIMITED — M&A Activity 2008
Aug 4, 2008
65291_rns_2008-08-04_036cc59c-42ca-4c8b-80a1-5e4b190f550d.pdf
M&A Activity
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5 August 2008
Dear Ausdrill Shareholder
Further ExtensionTo Macmahon Takeover Offer for Ausdrill
As Chairman of Macmahon Holdings, I would like to take this opportunity to bring you up to date with our offer of 1.45 Macmahon shares for each of your Ausdrill shares.
We strongly believe that bringing together the Macmahon and Ausdrill businesses makes sense for shareholders of both companies.
For Ausdrill shareholders, this is an outstanding opportunity to capture a high value for your shares. Our ‘all shares’ offer means you will retain on-going participation in a larger and more diversified business. Significantly, you will have noted that the Ausdrill board has continued with its “business as usual strategy” and has not presented any alternative value-adding strategies for you and your fellow shareholders.
You will also be acutely aware of the turmoil in financial markets in recent times. Since we announced our offer on 21 May, the Australian ASX300 index has fallen by approximately 16 per cent[1] .
Fortunately for Ausdrill shareholders, the Macmahon offer has lifted Ausdrill’s share price from pre-bid levels of approximately $1.95 to its most recent closing price of $2.28[2] .
During this year’s market turbulence, Macmahon has been a standout performer, with investors continuing to recognise the breadth of the company’s activities, the quality of our earnings and our very positive growth outlook.
In the year to 30 June 2008 Macmahon expects that it will increase its underlying earnings per share by in excess of 40 per cent. In contrast, Ausdrill’s Target’s Statement shows that it expects to increase earnings per share for the 2008 financial year by only 8 per cent[3] .
We take great pride in the fact that Macmahon has strong appeal in capital markets. This is reflected in our share price, market rating and liquidity of our shares, something that has become increasingly important for investors in these difficult and uncertain times.
With these very important issues in mind, not only do we expect Ausdrill’s share price to fall significantly if the Macmahon offer lapses, potentially to well below $1.95, but given the material lack of liquidity, investors may find it difficult to sell their Ausdrill shares. We believe that exchanging your Ausdrill shares for Macmahon shares by accepting our offer will reduce the risk profile of your investment.
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Macmahon Holdings Ltd ABN 93 007 634 406
Level 3 263 Adelaide Terrace Perth WA 6000 PO Box 198 Cannington WA 6987 Telephone: (08) 9365 1111 Facsimile: (08) 9365 1186 Web: www.macmahon.com.au Email: [email protected]
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It is also important for you to recognise that since 11 July, the Ausdrill share price has continually traded at a discount to Macmahon’s implied offer price. This is further confirmation of the value of the Macmahon offer for your Ausdrill shares.
We believe Ausdrill is a good business - clearly, we would not be proposing to combine the companies if we did not think that was the case.
However, we also strongly believe that Ausdrill shareholders will secure more value by ACCEPTING OUR OFFER . Macmahon’s offer provides Ausdrill shareholders with the opportunity to become shareholders in a great Australian contracting and construction business.
To this end, Macmahon has decided to extend our offer until Tuesday 16 September 2008.
We hope you will think carefully about ACCEPTING OUR OFFER and give close consideration to the opportunity ahead and the implications for Ausdrill shares if our offer lapses.
Yours faithfully
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Richard Carter Chairman
[1] IRESS as at 4 August 2008
[2] Closing price as at 4 August 2008
[3] Based on 2007 pro forma EPS and FY08E pro forma EPS per Ausdrill’s Target’s Statement
For further information or assistance please contact the Offer Information Line on 1300 726 037 or +61 394 154 345 for international callers.
Macmahon Holdings Ltd ABN 93 007 634 406
Level 3 263 Adelaide Terrace Perth WA 6000 PO Box 198 Cannington WA 6987 Telephone: (08) 9365 1111 Facsimile: (08) 9365 1186 Web: www.macmahon.com.au Email: [email protected]