Italy-based global contractor Webuild S.p.A. has cancelled a $237-million planned purchase of Perth-based construction firm Clough Ltd. from its South Africa-based parent Murray & Roberts Holding Ltd.—a deal that was set to boost the European firm's Australia footprint—saying the companies “jointly determined and agreed that there is no reasonable prospect of that acquisition proceeding through to a successful completion.”
Webuild announced the deal on Nov. 8, noting Clough’s reported 2021 revenue of $960 million and a $2.1-billion backlog, mainly in Australia and North America, but announced the transaction's "immediate" end on Dec. 5.
Clough is a joint venture partner with Webuild on the 2,000-MW Snowy Mountain 2.0 hydro pumped storage development in New South Wales, Australia. The firms are also working together or bidding on Australian transportation projects. Webuild employs about 1,800 in Australia and reported a backlog there of $9 billion. Clough has a workforce of about 2,500.
Webuild ranks at No. 53 on ENR's list of Top 250 Global Contractors, reporting $7.9 billion in global construction revenue.
According to a November financial document filed by Murray & Roberts, Webuild was set to provide Clough with an interim loan of more than $20 million until the planned sale was closed.
But the proposed date to implement the loan had passed, Murray & Roberts said.
“The parties have mutually agreed that there is no reasonable prospect of the interim loan being put in place and therefore the proposed transaction cannot proceed through to successful completion,” the company said.
Company spokespersons declined further comment on why the loan did not proceed or why sale talks ended.
'Left With No Choice'
Murray & Roberts said that it was “left with no choice but to place Clough and its subsidiaries under voluntary administration in Australia with immediate effect.” It has appointed Deloitte Australia to manage the transition process.
In its filing, Murray & Roberts said voluntary administration "is a flexible, short-term process" intended to "maximize" a financially challenged firm's ability to continue operating and not be liquidated. The process also includes "exploring options for sale, restructure or recapitalization," the filing said.
Clough reported in June a roughly $255-million net loss in its latest fiscal year, with Murray & Roberts noting in an October shareholder update the need for added working capita for Clough "to address the dislocation in project cash flows."
The note pointed to "margin deterioration" on at least two lump sum fixed-priced contracts, which it said was due to payment delays and supply chain disruptions and was expected to result in "at least" a 100% drop in financial results for the six months ending Dec. 31, compared to the previous same period.
An Australian Financial Review report on Dec. 4 also pointed to "delays and cost blow-outs" on the Snowy 2.0 project.
Webuild and Murray & Roberts spokespersons declined to confirm the financial issues.
Regarding Clough, the Murray & Roberts spokesperson said “the voluntary administration is a process to save the company." He said the Deloitte administrators "now have control over the day-to-day management of Clough ... to determine the plan going forward." The firm will continue work on Snowy 2.0, "but the appointed administrators will be taking that conversation forward with the client," said the Murray & Roberts spokesperson.
Clough, founded in 1919, was acquired by Murray & Roberts in 2013. The parent's filing said the administration process for Clough would not affect Murray & Roberts.
Webuild said “it will continue to look for opportunities for growth, including in the Australian market, in accordance with its previously announced strategies."