Hochtief ropes in Qatar as an ally against ACS bid

Germany's Hochtief on Monday stepped up its defense against Spanish construction group ACS's hostile lowball takeover bid by reining in sovereign wealth fund Qatar Holding to become a major shareholder in the company.

Qatar Holding has agreed to take a 9.1-percent stake in Hochtief through a capital increase of about 10 percent of the leading German builder for about 400 million euros. The sovereign wealth fund will be paying 57.114 euros per share, close to its current market price. Existing Hochtief shareholders do not have the right to subscribe to the capital increase, which will dilute ACS's holding to about 27 percent from 29.9 percent at present.

ACS, which is chaired by Real Madrid soccer club president Florentino Pérez, is offering eight of its own shares for every five of Hochtief. The bid is currently valued at a discount to Hochtief's market price.

ACS officially launched its bid last week after getting the go-ahead to do so by the German financial sector regulator. Hochtief shareholders have until the end of this month to accept it. The Spanish firm is looking to raise its holding to just over 50 percent in order to be able to consolidate Hochtief in its own books, and gain control of the company.

"I could imagine Qatar raising its stake further. It makes it more difficult for ACS," Bloomberg quoted Heino Hammann, an analyst at Norddeutsche Landesbank Girozentrale, as saying. "This is far from over."

Hochtief already has a presence in Qatar, where it has five subsidiaries and employs 5,000 people. It has a joint venture with Lusail Real Estate Development, which is planning to build a new city in Qatar for 200,000 inhabitants, and which will host the 2022 World Cup soccer finals.

In a statement, Hochtief Chief Executive Officer Herbert Lütkestratkötter said: "Qatar's strong relationship with the German state was a key element of its decision to invest in Hochtief."

Lütkestratkötter said Qatar had already expressed an interest in taking a stake in Hochtief before ACS and the CEO attended a dinner in November organized by German Chancellor Angela Merkel for Qatari Prime Minister Hamad bin Jassim bin Jaber al-Thani.