Hochtief is fighting a takeover bid from Spain's Actividades de Construccion y Servicios by taking on Qatar Holding as a major shareholder.
Hochtief buttressed by stake from Qatar
Hochtief is fighting a takeover bid from Spain's Actividades de Construccion y Servicios (ACS) by taking on Qatar Holding as a major shareholder.
Shares in the stock rose as much as 4.3 per cent to €62.70 in afternoon trading as the German builder said it would increase its capital stock by about 10 per cent by issuing shares at €57.114 each.
It will increase the pool of shares available and dilute the 29.98 per cent stake held by ACS to about 27 per cent, leaving Qatar Holding to take a slice of almost 9.1 per cent of the company for almost €400 million.
The sovereign wealth fund's investment will "strengthen the financial position and provide latitude for the announced further growth" after a cancelled bond sale, Hochtief said.
Hochtief's move is a defence mechanism, analysts said. "Qatar is unlikely to accept a takeover bid by ACS and if they have a second major shareholder, it limits the power of ACS should they take over," said Stefan Roehle, an analyst at Independent Research in Frankfurt.
ACS has made repeated attempts to take over Hochtief by increasing its stake in the company to more than 50 per cent.
But in a blow to Hochtief, ACS won approval from Germany's financial regulator last month for its €2.7 billion bid for Hochtief, which has fought the offer, saying it does not provide value for shareholders.
ACS is offering eight of its own shares for every five of the German builder's, and investors have until the end of the month to decide.
"It's a poison pill," the DZ Bank analyst Marc Nettelbeck said of Hochtief's tie-up with Qatar Holding. "[Hochtief] have tried to force ACS to bid for Leighton in Australia but it didn't work so they went down the capital increase route and will present a major shareholder," Mr Nettelbeck said.
But fending off a takeover attempt by ACS is not the only benefit of bringing Qatar Holding on board.
The capital injection from Qatar Holding, one of the largest sovereign investment funds in the world, with about US$100bn in assets, will allow Hochtief to strengthen its financial position, fund growth and maintain an already existing relationship with Doha, where the company already has a number of projects.