Cimic Group Ltd (ASX: CIM) has announced that it’s going to sell half of Thiess to Elliot.
Cimic is a global engineering business and Theiss is the world’s largest mining services businesses.
What is happening?
The market already knew that Cimic was thinking about selling half of Thiess. Today we learned that the sale is going ahead, and that price of the transaction.
Elliot and Cimic will jointly control Thiess. The price for Elliot’s 50% stake implies an enterprise valuation of approximately $4.3 billion. It will generate cash proceeds of $1.7 billion to $1.9 billion for Cimic, as well as reducing Cimic’s factoring balance by approximately $700 million and Cimic’s lease liability balance by approximately $500 million.
The transaction is expected to generate a pre-tax gain for Cimic of around $2.2 billion and a post-tax gain of around $1.4 billion.
Cimic said it will retain 100% of Sedgman.
Cimic Executive Chairman Marcelino Fernandez Verdes said: “The sale agreement reflects Thiess’ ongoing strategic importance as a core activity for Cimic. It capitalises on the robust outlook for the mining sector, and together with Elliot, we will pursue market opportunities in line with Thiess’ growth and diversification strategy.”
Summary
This seems like a solid sale by Cimic. It has done well with the ownership of Thiess and will continue to benefit. Though it’s seemingly losing a significant portion of the deal to tax. It will be interesting to see what growth Thiess goes for and what Cimic decides to do with the proceeds.
Cimic is an interesting business, but it’s not the type of business I’d buy for my own portfolio. There are other ASX growth shares I’d much rather buy, even industrial ones, like Brickworks Limited (ASX: BKW) which I wrote about here.
