Sembawang Engineers and Constructors Pte Ltd (Sembawang), a Singapore-based subsidiary of construction firm Punj Lloyd Ltd, has pulled out of the proposed deal to buy the entire construction business of ASX-listed Macmahon Holdings Ltd. However, it has retained interest to acquire a part of the business excluding rails units even as Macmahon board rejected it on Monday.

This comes just three days after Sembawang revised its previous offer to buy the business as a counteroffer to a deal struck by Leighton Holdings Ltd, a large minority shareholder of the contract mining and construction company Macmahon.

Sembawang had offered to buy the entire construction business of Macmahon Holdings including its rails business for A$38 million ($40 million) or a part of a construction business for A$25 million ($26.2 million) as counter offer against A$20 million offered by Leighton Holdings.

Leighton had signed an asset purchase agreement with Macmahon last month.

The revised offer of Sembawang had certain conditions including acceptance of the offer by Macmahon by January 12. Since this offer lapsed, Sembawang has pulled out its proposed bid for first part of the proposal. It has given a revised deadline of January 15 for acceptance of the proposal by Macmahon to pursue the counter offer for the construction business excluding the rails unit.

Macmahon said in a statement that it has rejected this proposal as Sembawang did not provide details as requested by its board, uncertainty and risk of completion of its proposal, besides ‘Sembawang’s inconsistent conduct, including its breach of normal commercial confidentiality’.

Previously, Sembawang had said it is sending legal notices to Macmahon as it did not allow the former to proceed with due diligence based on the previous offer it had made in November, a month before Leighton signed the agreement. It said the nature of the agreement with Leighton gave it the power to veto such counter offers.

In response to this, Macmahon said the only proposal it has received from Sembawang is the unsolicited, non-binding, incomplete and unconditional proposal dated January 3. It added that it is preparing groundwork for an EGM next month to consider the deal with Leighton.

Sembawang, which has been eyeing Macmahon’s construction business for over four years, has presence in Malaysia, Indonesia, Hong Kong, China, India, UAE, Bahrain and Australia. Some of the projects it has concluded include Singapore’s Marina Bay Sands and Resorts World Sentosa integrated casino resorts and Jumeirah island villas in Dubai.

Punj Lloyd Ltd is an infrastructure firm providing engineering, procurement, and construction services with around $2 billion in annual revenues, but thin margins. The firm counts among its investors Warburg, which held 4.46 per cent stake in the firm as of September 30.

(Edited by Prem Udayabhanu)

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