German regulator approves Hochtief takeover by ACS

Spanish construction giant ACS was free Tuesday to launch formally a bid to take control of rival Hochtief and create one of the world’s biggest building firms after receiving German regulatory approval.

Hochtief’s management has said the offer undervalues Germany’s biggest construction firm, however, although it has stopped short of publicly declaring the bid hostile.

ACS already owns a stake of just under 30 percent in Hochtief, which in turn controls Australia’s Leighton, and plans to offer eight of its shares for every five of Hochtief.

Germany’s financial regulator, Bafin, said late Monday that ACS’s offer was in accordance with German takeover law, although the Spanish firm had to make “significant improvements” to the bid, according to a statement.

The official bid acceptance period will begin once ACS publishes its offer, expected in early December.

From then, Hochtief shareholders have four weeks to decide whether they wish to accept the offer.

ACS said in September it aimed to launch its all-share bid for the 70 percent of Hochtief it didn’t own.

But it added that it aimed only to increase its stake to slightly above 50 percent so that it could consolidate Hochtief on its balance sheet.

In an attempt to stymie the deal and provide a “poison pill” for the Spanish, Hochtief applied to Australian regulators to force ACS to make a separate and expansive offer to buy Leighton as well.

But Australia’s Takeover Panel rejected the request and on Monday turned down an appeal by the German firm.

— Dow Jones Newswires contributed to this story —