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- Lendlease (LLC) agrees to sell its services business to Service Stream (SSM) for $310 million
- SSM is using a fully underwritten placement and pro rata accelerated non-renounceable entitlement offer to raise roughly $185 million for the purchase
- The raising comprises a 1 for 3 entitlement offer of around $123.1 million and a $61.9 million placement
- All shares under the offer will be issued at $0.90 per share, a 6.2 per cent discount on the last traded share price
- Service Stream shares are sitting at 96c in a trading halt while Lendlease shares are up 2.36 per cent to sit at $11.70 at 1:05 pm AEST
Lendlease (LLC) has reached a deal with Service Stream (SSM) for the sale of its services division for $310 million.
The deal, which is scheduled to close by the end of the calendar year 2021, is subject to a number of conditions, including client and third-party approvals.
Service Stream is using a fully underwritten placement and pro rata accelerated non-renounceable entitlement offer to raise roughly $185 million for the purchase.
The raising comprises a one for three entitlement offer of around $123.1 million, comprising an institutional entitlement offer and a retail entitlement offer, and placement of roughly $61.9 million.
All shares under the offer will be issued at $0.90 per share with approximately 205.6 million new fully paid shares to be issued, equivalent to approximately 50.1 per cent of existing ordinary shares on issue.
The offer price represents a 6.2 per cent discount to the last traded share price of 96 cents.
Under the entitlement offer, each eligible shareholder is invited to subscribe for one share for every three they own as of 7 pm AEST July 23.
At the offer price, a $61.9 million fully underwritten placement will be offered to institutional investors in Australia and in some other countries.
Service Stream managing director Leigh Mackender said the combination of its two businesses would create a diverse provider operating across the infrastructure services sector.
“The acquisition is highly complementary to Service Stream’s existing business, expanding our utility operations, delivering an established transportation infrastructure division and enhancing Service Stream’s contracted operations within the telecommunications sector,” he said.
“The acquisition will further diversify Service Stream’s revenues, bolster the scale and depth of our operations, and expand the Group’s immediate and future addressable markets to support ongoing growth.”
Lendlease Global CEO Tony Lombardo said the divestment of the services business, along with other divestments of the engineering and US telecommunications and energy businesses aligned with the focus on areas where the company had a ‘strong competitive edge’.
“The divestments, combined with recently announced changes to the organisational structure, better position the group to deliver on our $110 billion development pipeline, continue to deliver our construction backlog and grow our investments platform in a more focused and efficient way,” he said.
Lendelase services managing director Toby Matthews said the sale of the businesses was a good outcome for all.
“Service Stream is a leader in the sector, and our skilled workforce, customer relationships and extensive workbook will significantly expand its operations across Australia,” he said.
The full amount of sale proceeds is due to be received by Lendlease on completion of the sale.
Service Stream shares are sitting at 96c in a trading halt while Lendlease shares are up 2.36 per cent to sit at $11.70 at 1:05 pm AEST.
