Leighton in tie-up talks with Al Habtoor
Sydney, July 13, 2007
Australia's Leighton Holdings is in tie-up talks with the UAE's Al Habtoor Engineering to boost its presence in the Gulf market.
The Australian construction giant said it was meeting several Middle Eastern companies, including Al Habtoor, regarding potential growth initiatives.
'These initiatives include acquisitions, joint ventures and partnerships,' Leighton said in a statement.
The company declined to comment on a report in the Australian Financial Review newspaper that it was negotiating to take a sizeable stake in Dubai-based Al Habtoor.
Al Habtoor is one of the Middle East's biggest engineering firms.
'Leighton's objective has been to get 30 per cent of its work from Asia and this potential deal in the Middle East is definitely a positive in achieving this target,' Commonwealth Securities industrial analyst Cassandra Meagher said.
'There is likely to be further growth in the Middle East and also in India.'
The newspaper report said the Leighton stake would value Al Habtoor at up to A$2 billion ($1.73 billion) and Leighton would have the potential to increase its holding in the future.
The Al Habtoor Group is a privately owned conglomerate with interests in almost all areas of regional business activity, including hotels and luxury motor vehicles. It's chairman, Khalaf Al Habtoor, is ranked by Forbes as the world's 369th billionaire.
Leighton chief executive Wal King said last month the group expected to significantly increase its exposure in the Gulf in coming months. It is already building a A$518 million equestrian centre in Qatar and is part of the A$1 billion-plus City of Arabia project in Dubai.
'We're confident we will pull another big project off there this year,' King said in June.
With about $400 billion in potential projects, funded by the region's vast oil wealth, the potential was checked only by available resources, King said.
During May 2007 and June 2007 approximately $90 billion worth of projects were announced in the Gulf region, with $63.5 billion of these being in the UAE, according to the Middle East Economic Digest.
Links between Leighton and Al Habtoor go back to 1986, when the two won the contract for the Arabian Gulf University Student Housing construction.
Leighton, which is also the world's biggest mining contractor has seen its share price more than 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.
Leighton includes Australia's three biggest construction companies, Thiess, the Leighton Group and John Holland.Reuters