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UPDATE 2-Hochtief urges shareholders to reject ACS bid

FRANKFURT, Dec 15 (Reuters) - Hochtief urged its shareholders not to accept a low-ball takeover bid by Spain's ACS on Wednesday, in a move that may further sour relations after a three-month war of words. "The Executive Board and the Supervisory Board do not deem the offer's consideration adequate from a financial perspective," Hochtief wrote in a statement, adding that this was also confirmed by Credit Suisse and Deutsche Bank , who are advising Hochtief. A spokeswoman for ACS said its offer for Hochtief remains unchanged. Spain's largest construction company ACS, headed by Real Madrid soccer club president Florentino Perez, made a formal takeover bid for Germany's biggest builder Hochtief two weeks ago, after initially expressing interest in hiking its 29.99 percent stake in September. "This does not come as a surprise at all and everything that Hochtief is now saying and recommending is exactly as expected," a Frankfurt-based analyst who declined to be named said. He also declined to comment on what the next steps for Hochtief may be. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Reuters Breakingviews columns: and For a Timeline, click on: For a Factbox, click on ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> Hochtief Chief Executive Herbert Luetkestratkoetter has explored a number of options to fend off the bid, including seeking a white knight, though he told Spiegel magazine last week that Hochtief did not see the offer as hostile. Last week, Hochtief announced that Qatar Holding, an investment vehicle of the Gulf state's government, would buy a 10 percent stake of fresh capital in the group, adding muscle to their defence and angering ACS and Hochtief investor Southeastern Asset Management. ACS is offering eight of its own shares for every five of Hochtief's, and has said it aims to gradually build up its stake to over 50 percent, eventually enabling it to consolidate Hochtief in its own financial accounts. That swap ratio values Hochtief shares at 57.33 euros each, at an 11 percent discount to Tuesday's closing price. "I see the true value of Hochtief at close to 85 euros and ACS is currently not even close to matching that with its bid," a trader, who declined to be named, said. "I see this being dragged on for a long time." The tender period for the bid runs through Dec. 29, and ACS must surpass the 30 percent threshold before then to avoid triggering a mandatory bid. According to German financial regulator BaFin, if ACS fails to reach the 30 percent stake, it can launch a new bid, which would be based on the volume-weighted average price for the past three months, making it more costly to gain control of Hochtief. Also on Wednesday, Hochtief restated its full-year outlook for 2011 and 2013 and affirmed its aim to divest its Concessions business unit in 2011, either through a sale to investors or through an initial public offering. (Reporting by Josie Cox; Additional reporting by Matthias Inverardi; Editing by Jonathan Gould and Louise Heavens) Keywords: HOCHTIEF/ACS (josie.cox@thomsonreuters.com; +49 69 7565 1207; Reuters Messaging: josie.cox.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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