Melbourne-based critical networks development and maintenance provider Service Stream (ASX: SSM) has today announced the acquisition of Lendlease Group's (ASX: LLC) services wing at a purchase price of $310 million.
The deal marks the end of a long-winded sales process for construction giant Lendlease, which first began looking for a suitor in January 2020. Though plans were put on ice due to the pandemic, that auction was restarted this May.
Lendlease Services was first flagged for offloading as part of an internal review in November 2018, which deemed both the services and engineering divisions to be non-core. Spanish multinational Acciona acquired the latter for $180 million in a deal inked last September.
Service Stream will fund its offer with a $185 million equity raising underwritten by Ord Minnett. Sale proceeds are due to be received on completion of the transaction - tipped for the end of the calendar year, pending approvals from clients and third parties.
Service Stream managing director Leigh Mackender said the combination of the two businesses will create "a diverse, multi-network essential service provider, operating across the growing infrastructure services sector".
"We look forward to welcoming the Lendlease Services team as we collectively expand our service offerings, broaden the scale and depth of our operations and continue to support our valued customers," he added.
Lendlease Global CEO Tony Lombardo says the divestment of the Services business "aligns with the group strategy to be more focused on the areas where our competitive edge is the strongest."
"The divestments, combined with recently announced changes to the organisational structure, better position the Group to deliver on our $110 billion development pipeline, continue to deliver our construction backlog and grow our investments platform in a more focused and efficient way," Lombardo says.
After reporting a loss of $310 million in FY20, Lendlease was back in the black in the first half of FY21, posting a statutory after-tax profit of $196 million.
In a market update released last month, the company says it anticipates a FY21 profit of between $200 million to $320 million.
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