Qatar buys into German takeover target Hochtief

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A bid by Spanish construction firm ACS for rival Hochtief took a new twist Monday with news that the Gulf state of Qatar is set to buy a 9.1-percent stake in the German firm.

Hochtief's management has tried so far without success to thwart the Spanish offer, which would create Europe's biggest construction group and the number three worldwide.

A Hochtief spokesman told AFP the Qatar deal stemmed from talks that began long ago and was not related to ACS's all-share offer, but analysts were not so sure.

"Qatar has deep pockets," one analyst who declined to be named told AFP, predicting that the Gulf state, which also owns a sizeable interest in German auto giant Volkswagen, would increase its Hochtief stake further.

"Owning 9.1 percent isn't much use (for Hochtief)," the analyst said.

Another noted that with Hochtief shares soaring more than 5.5 percent on news of the Qatar deal, it would make a takeover by ACS "considerably more expensive for ACS."

Qatar Holding's chief executive, Ahmad Mohamed Al Sayed, vowed to "seek to unite the strengths of Hochtief management, the major shareholders including ACS and other stakeholders to ensure a vibrant future for the company."

The deal, in form of a capital increase, will also provide Hochtief with some much-needed funds -- about 400 million euros (534 million dollars) in total -- after a bond issue was scrapped in September.

It also provides some juicy contracts as Qatar gets ready to host the 2022 football World Cup.

The group said Monday that it had created a joint venture in Qatar to build an entirely new city, Lusail, which has been designed for 200,000 inhabitants and is expected to host World Cup matches.

Qatar is to pay 57.114 euros per share, below the the current price for Hochtief stock but around the value of the ACS bid.

Terms of the deal excluded subscription rights of existing shareholders, which meant that ACS could not beef up its current stake in Hochtief of nearly 30 percent.

ACS has offered eight of its shares for every five of Hochtief, but Hochtief directors say that undervalues the group, which owns a lucrative 54.5-percent stake in the Australian construction firm Leighton.

Hochtief shareholders have until December 29 to accept the ACS offer.

Hochtief has tried several times to parry the ACS offer, but the German financial market watchdog said last week that the Spanish bid could go ahead if substantial corrections were made.

Hochtief has unveiled big contracts in India and Australia and given an ambitous earnings outlook in what appeared like a bid to get shareholders to hang onto their stakes.

Hochtief currently has five subsidiaries in Qatar and employs more than 5,000 people locally, it said.

-- Dow Jones Newswires contributed to this report --

© 2010 AFP

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