By a staff reporter
UGL Ltd shares have soared after the group announced it might demerge its property and engineering divisions as part of a sweeping corporate review that could also see major changes to the group's executive team.
At 1110 AEDT shares in the group jumped 8.7 per cent to $10.25 after hitting highs of $10.29 in early trade, against a benchmark fall of 0.69 per cent.
In a statement to the Australian Securities Exchange, UGL said the review was prompted by significant growth in its property business, which now represents close to 50 per cent of earnings.
"Various alternatives from maintaining the current corporate structure, reviewing a potential structural separation or demerger of the company, as well as UGL’s M&A strategy will be considered," UGL Chairman Trevor Rowe said.
"The board of directors has resolved to undertake a review of the optimal corporate structure under which UGL’s engineering, operations and maintenance and property businesses should operate."
Chief executive officer Richard Leupen will deliver the review, which will also include a detailed audit of UGL's management structure and could see Mr Leupen replaced.
"At the conclusion of the review, if the board determines that a change to the current corporate structure is required, it is intended that Richard will continue in his role for a short time beyond the current end date of his contract on 31 March 2014 to complete the work," Mr Lowe said.
"Following the conclusion of the review, we will provide an update on the programme the board is undertaking to ensure the orderly transition of management, including the criteria for assessing both internal and external candidates for CEO succession.”
However, UGL cautioned there were a number of significant issues to be considered so there was no assurance that the review wiould result in structural changes.
Goldman Sachs has been appointed to assist in the review.