Murray & Roberts has reached agreement, subject to certain conditions precedent, to acquire a strategic interest in leading Australian engineering and contracting group Clough. The transaction will result in Murray & Roberts holding 29,28% of the shares in Clough for a consideration of A$81,6 million (approximately R380 million at current exchange rates).

Clough is one of Australia’s largest multidisciplinary engineering and contracting groups and is listed on the Australian Stock Exchange. It operates globally in industry sectors such as onshore and offshore oil and gas, petrochemicals, minerals, infrastructure and property and has a significant capability in project management, engineering and construction and facilities installation, operations and maintenance.

The transaction will provide Murray & Roberts with an operational presence in Southeast Asia as the Group pursues its Globalising Murray & Roberts strategy. The strategic relationship already in effect has created a framework for expanded global opportunities and should deliver significant advantages to both partners as their geographic and specialist focuses and strengths are blended.

Commenting on the transaction, Murray & Roberts Group CE, Brian Bruce, said: “We expect that the strategic relationship will add further value by introducing Clough into regions of the world where Murray & Roberts has a leading presence, with a particular focus on new oil and gas business opportunities in the Middle East and west coast of Africa. In turn, it provides Murray & Roberts with access into the engineering and contracting oil and gas sector.”

David Singleton, CEO and MD of Clough, said: “In Murray & Roberts we saw a partner with complementary vision and with a culture that fits with our own. The alliance will greatly enhance our competitiveness in the minerals area, not only in Australia but also in South East Asia. We believe that global scale is increasingly important and we sought a partner in our general market sector who also had a complementary market position. Murray & Roberts’ position in Africa, with a vision towards Asia, fitted that criteria.”

Murray & Roberts currently holds a 4.9% interest in Clough.  Following the transaction, Murray & Roberts will have a 29.28% shareholding in Clough and McRae will hold 34.62% of Clough shares.

The transaction is subject to fulfilment of the following conditions precedent, which are expected to be fulfilled on or about 4 November 2004:

• Approval of the transaction by Clough shareholders in general meeting;

• Confirmation of no objection by the Australian Foreign Investment Review Board;

• approval by the South African Reserve Bank.

• Satisfactory completion of a due diligence review by Murray & Roberts.

In terms of the agreement Murray & Roberts will:

• subscribe for 60 million new shares in Clough for a total consideration of A$40.8 million; and

• acquire 60 million shares in Clough from McRae Investments (representing the Clough family interests in Clough) for a total consideration of A$40.8 million.

Other significant terms of the agreement are:

• The new Clough shares acquired by Murray & Roberts in terms of the subscription will be subject to a voluntary escrow period of 12 months.

• Murray & Roberts and McRae will enter a shareholders’ agreement relating to their investment in Clough that will include the grant of certain rights to Murray & Roberts in relation to the remaining Clough shares held by McRae. 

• Once the initial acquisition is complete, Murray & Roberts and McRae will have aggregate interest in 63.9% of the issued share capital of Clough.

• Murray & Roberts, subject to market conditions, may decide to acquire up to a 3% interest in Clough every six months as permitted by the Australian Corporations Act.

• It is expected that upon fulfilment of the conditions precedent, two representatives of Murray & Roberts will join the Clough board of directors.

• The agreement provides for establishing an equal joint venture between Clough and Murray & Roberts, focused in Australia and Southeast Asia, to address additional opportunities, particularly in relation to metals and minerals extraction, processing and industrial plant facilities associated with the resources sector. 

The transaction will be funded by Murray & Roberts from internal capacity.

The transaction is not expected to have a material effect on the financial results for the year to 30 June 2005.