The China Communications Construction Company will become the first big Chinese group to build Australian roads and bridges after sealing a deal to acquire John Holland from Leighton Holdings for $853 million.
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CCCC plans to keep the John Holland brand and retain senior management as it uses the acquisition to get a foothold in the Australian market and bid on a series of multi-billion dollar infrastructure projects.
CCCC, a state-owned company that has a market capitalisation of $23.5 billion, will become one of Australia's biggest construction companies after Leighton and Lend Lease.
John Holland's current projects include tunnels and stations for Sydney's North West Rail Link; building Perth's new $1.2 billion Children's Hospital; and developing part of Victoria's new Regional Rail Link.
The sale, which was reported by Street Talk on Thursday, comes as the company's chief executive, Marcelino Fernandez Verdes, restructures the company and pays down debt following Spanish construction group ACS's $1.15 billion takeover of Leighton in March.
John Holland, which was acquired by Leighton in 2000, was considered the easiest of Leighton's three big subsidiaries, which include Thiess and Leighton Contractors, to sell.
The sale includes $100 million of debt in addition to John Holland's equity value of $853 million and reduces Leighton's gearing, which was running at 33.7 percent at the end of September, to around 24 percent.
"The divestment of John Holland supports our focus on further reducing gearing and strengthening our balance sheet so we can be sustainably competitive," Mr Fernandez Verdes said.
"Proceeds will be used to finance future growth, particularly in public private partnerships."
Some 4100 John Holland employees will transfer to CCCC International Holding Limited, a subsidiary of CCCC.
Lu Jianzhong, CCCI's president, said there were "significant growth opportunities" in the Australian market.
"From our perspective, ownership of John Holland is the optimal way for CCCC to participate in this dynamic market as part of our aim to be a global transportation infrastructure business."
CCCC, which is listed on the Hong Kong and Shanghai stock exchanges, specialises in large transport projects, including bridges, ports, and high speed rail networks such as the 1,318 kilometre rail link between Beijing and Shanghai.
It plans use John Holland's expertise in road and rail projects, as well as tunnelling and water infrastructure elsewhere in Asia.
The sale, which requires the approval of the Foreign Investment Review Board, is expected to be completed in early 2015.
The deal comes comes after Australia struck a free trade agreement with China in November that allows for Chinese workers to be brought into Australia to help build projects.
Leighton on Friday released details of Mr Fernandez Verdes' pay package after the Spaniard replaced Hamish Tyrwhitt as CEO in March and subsequently also became chairman.
Mr Fernandez Verdes, who is CEO of Hochtief, Leighton's controlling shareholder, will be paid an allowance of $495,000 in 2015.
He will also receive 1.2 million share appreciation rights, which reflect any increase in the company's stock price between March 2014, when they traded at an average of $17.71, and March 2016.
The maximum price payable per share right will be $32.29, giving Mr Fernandez Verdes the opportunity to make more than $17 million.
