- Lendlease Services to be sold to Service Stream
- Deal worth $310 million
- SSM to fund purchase with equity raise, and debt facilities
Lendlease (ASX: LLC) today announced the sale of the company’s services business for $310 million.
Sold to Service Stream (ASX: SSM), this mornings announcement noted LLC entered into agreements with the company, the transaction is expected to be completed before the end of the calendar year.
Global Chief Executive Officer, Tony Lombardo, said: “The divestment of the Services business, along with other recent divestments including the sale of the Engineering business and the US Telecommunications and Energy businesses, aligns with the Group strategy to be more focused on the areas where our competitive edge is the strongest.”
Service Stream Managing Director, Leigh Mackender, said: “The combination of our two businesses will create a diverse, multi-network essential service provider, operating across the growing infrastructure services sector.”
Following the announcement, Lendlease share prices rose. The company opened at $11.57 this morning, and at time of publication, was trading at $11.71.
Meanwhile, SSM prices haven’t been doing well, since the pandemic, prices came down from the 2019 highs of almost $3 per share. While the company lost a dollar at the start of the pandemic, it lost around 56 cents in the last few days of February, and almost 90 cents since the start of the year.
SSM said the enterprise value of Lendlease Services is $310 million, and an expected equity purchase price of approximately $295 million after adjusting for debt and debt-like items.
The acquisition will be funded through a combination of a $123.1 million fully underwritten 1 for 3 entitlement offer, $61.9 million fully underwritten placement, and $123 million from draw down of debt facilities and available cash.
All shares under the equity raising will be issued at 90 cents, with circa 205 million new fully paid ordinary shares to be issued, equivalent to approximately 50.1% of existing ordinary shares on issue. The new shares will rank equally with existing fully paid ordinary SSM shares.