Skanska AB has announced that it intends to sell its mining businesses in South Africa, Canada and Australia. The letter of intent signed by the company covers the sale of controlling interests in its mining contracting businesses to Murray & Roberts, a leading South African industrial and engineering contractor.
The planned sale involves Skanska’s 79.1% holding in The Cementation Company (Africa) Ltd, the wholly owned subsidiary Cementation Skanska Canada Inc, and a start-up mining contracting operation in Australia. These businesses within Skanska UK were part of Kvaerner Construction (UK), which Skanska acquired in 2000.
The operations mainly include shaft sinking, mine development and contract mining, which are considered to be outside the core business of Skanska.
The agreement does not include the UK tunnelling business, Cementation Skanska, which is being retained as part of the Skanska UK operations.
Total net sales of the businesses to be sold were SEK1.3bn (US$133M) in 2002, with an operating profit of US$2.9M. The operations have a total of 8,400 employees.
The transaction is estimated to result in a capital loss of about US$10.3M, as a result of part of the goodwill expenditure allocated to these operations in the acquisition of Kvaerner Construction, being written off. The loss will be charged against the Group’s earnings in the fourth quarter of 2003.
Following completion of normal due diligence, the intention is for a sale and purchase agreement to be signed in January 2004, with such agreement being subject to regulatory approvals.
Financial closing of the transaction is anticipated during the first quarter of 2004.
