Australian contractor Macmahon Holdings said on Monday it has rejected a proposal for construction giant Leighton Holdings to take a significant stake in the company through a
Leighton confirmed the approach, which it said would have allowed the companies to jointly pursue resources and infrastructure business, and said it did not intend to bid for Macmahon following the rejection of the plan.
Macmahon, which has a market capitalisation of about A$680 million (US$575 million), said Leighton had bought a 4.9% stake in the company, but Macmahon had decided not to pursue the proposal after some early discussions.
"The directors are of the view that the proposal is not, on the basis of the indicative terms presented, in the best interests of Macmahon shareholders," the Perth-based company said in a statement.
Leighton said the proposal would have seen Macmahon remain completely independent.
"It is not Leighton Holdings' current intention to make an offer for Macmahon and we will deal with our shareholding in the ordinary course of business," it said in a statement.
Leighton has seen its share price nearly double this year, bolstered by soaring demand for commodities and booming infrastructure construction. Analysts say it has the capacity to spend several billion dollars on acquisitions.
Macmahon said it has appointed investment bank UBS as an adviser, together with Azure Capital and law firm Freehills.
Shares in Leighton, 54% owned by Germany's largest builder Hochtief, closed at A$36.90 on Friday. Macmahon closed at A$1.30.