AMEC bid for GRD may provide exit door for Seven

12 June 2009

Australian billionaire Kerry Stokes' Seven Network may be able to offload its ill-fated investment in the engineering and waste group GRD courtesy a non-binding takeover bid from the British engineering company AMEC. GRD, owned 12.2 per cent by Seven said yesterday that it has received an offer to pay 55 cents a share for the business. That amounts to 34 per cent over GRD's share price before the proposal, but still falls much short of the $2 a share Seven paid to 2007 to acquire its stake.

AMEC has been allowed by GRD's board to initiate the process by conducting a due diligence on its waste management business in Britain as also its engineering arm, Minproc. Shares of GRD surged 22 per cent but settled below the proposed bid at 50 cents.

Meanwhile, the engineering and project management giant AMEC told the London Stock Exchange that it has drawn up a conditional proposal for takeover of the West Australian firm. The offer is said to be worth more than £50 million.

Amec said, ''GRD is an independent listed Australian engineering and development company which would complement AMEC's operations in the mining sector.

If the AMEC bid were to go ahead, Seven's holding would be valued at $12.9 million, as against the $56.7 million the broadcaster paid to acquire the stake.

Seven acquired its stake in GRD in May 2007 first acquiring 20 million shares at $2.35 and then consolidating the acquisition with a further 3.5 million shares at $2.77 in June 2007. According to analysts, it was more an opportunistic move than a strategic initiative.