Construction and engineering giant Leighton Holdings has announced the sale of its Thiess Waste Management business to Remondis AG & Co KG for $218 million.
The sale represents part of Leighton’s strategy to offload non-core assets in an effort to focus on core operations and shore up the company’s balance sheet in response to significant write-downs over recent years.
Leighton chief executive Hamish Tyrwhitt says the sale represents a tangible demonstration of the company’s determination to reshape its operations.
He says together with last year’s sale of contract mining services provider HWE, around $1 billion worth of non-core assets has now been sold.
“The sale is part of our announced program to recycle capital from non-core into core assets,” Tyrwhitt says. “You can expect to see further divestments as we review the business and redirect capital into activities where the Leighton group excels and where returns can be enhanced.”
Tyrwhitt says this strategy will strengthen Leighton’s balance sheet and also provide sound financial funding for future company growth.
Once complete, Leighton says the sales will generate a net pre-tax gain of around $115 million – an amount which is not reflected in Net Profit After Tax guidance of $400-$450 million. The company adds that the cash proceeds will reduce the company’s gearing ratios by around two per cent.
Tyrwhitt says the purchase price represents Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and Earnings Before Interest and Tax (EBIT) multiples of around six to 10 times respectively – in line with recent market precedents.
Completion of the sale, which is subject to certain conditions including novation of major customer contracts, is expected to occur during the current financial year.