UGL has confirmed the long-gestating sale of its property arm, DTZ, to a private equity consortium including TPG Capital (TPG) for $1.215 billion, but surprised investors with the announcement of a CEO succession plan to be effected by the end of 2014.
At the 10.15am (AEST) official market open, UGL shares were 0.14 per cent lower at $6.93, against a benchmark index fall of 0.35 per cent.
The group said it expects net proceeds of between $1bn and $1.05bn from the sale to TPG, PAG Asia Capital (PAG) and Ontario Teachers’ Pension Plan (OTPP).
UGL said it expects the deal to be completed around September, pending certain approvals from regulatory bodies.
In a separate release, UGL announced Ross Taylor would succeed Richard Leupen as managing director and chief executive officer from November 24.
Mr Leupen will work with the board to ensure a smooth leadership transition prior to Mr Taylor's commencement. Mr Taylor's starting base salary will be $1.5 million, excluding short and long-term incentives.
While UGL said it was evaluating "a range of options for the efficient use of net proceeds", The Australian Financial Review reports the contractor is considering lobbing a bid for Leighton's John Holland business in the wake of its DTZ sale.
According to the newspaper, private equity firms, including Warburg Pincus, have already made approaches to UGL with a view to collaborating on further acquisitions of engineering businesses, including potentially, John Holland.
UGL expects a robust balance sheet after the completion of the sale, which will allow it to capitalise on future growth opportunities including reinvestment in the core engineering and maintenance services business to drive organic growth as well as the flexibility to consider potential strategic growth opportunities.
The group expects to resume paying dividends to shareholders from fiscal 2015.