Cimic, of which ACS indirectly controls 37% through its Hochtief share, has announced the sale of 50% of Thiess, its mining business, for 1.25 billion euros to the Elliott fund. Thiess is the world’s largest mining services provider with 25 projects across a range of commodities with annual revenues in excess of $4.1 billion.
The price for Elliott’s 50% equity interest in Thiess implies an enterprise valuation of approximately A$4.3 billion (based on 100% of Thiess), subject to certain adjustments. Furthermore, the transaction will strengthen Cimic balance sheet by generating cash proceeds on completion of A$1.7 to A$1.9 billion as well as reducing its factoring balance by approximately A$700 million and the firm’s lease liability balance by approximately A$500 million.
In opinion of the Bankinter analysis team the operatiom is a boost for ACS, “given that it means adding value to the company’s mining business while continuing to maintain a significant percentage of it.”
According to their calculations, the price paid is a multiple of 8.5 times EV/EBIT20, “which is in accordance with the market average for this type of company.”
The Spanish-controlled construction group has been trying to sell Thiess – its best performing division in 2019 with a profit of $603 million – for about a year but the transaction was held up by the COVID-19 pandemic. According to said CIMIC Group Executive Chairman Marcelino Fernández:
“The sale agreement reflects Thiess’ ongoing strategic importance as a core activity for CIMIC. It capitalises on the robust outlook for the mining sector and, together with Elliott, we will pursue market opportunities in line with Thiess’ growth and diversification strategy.”
Thiess is Cimic’s second largest source of income after construction, contributing 26% of total turnover last year, compared to 24% the previous year. Specifically, in 2019 it generated income of some 2,800 million euros, 13.4% more than a year earlier.
Elliott Advisers, the UK arm of US hedge fund Elliott Management, is one of the oldest fund managers of its kind under continuous operation and manages more than US$40 billion in assets, including equity positions in private and listed companies, in Australia and globally.