An Australian newspaper speculated on Monday that Downer EDI Ltd (ASX & NZX: DOW) was considering selling its foundation mining services division.
The Australian newspaper’s DataRoom column said speculation was mounting on Downer using investment bank UBS to test the market for the mining division.
DataRoom said while there are no current divestment plans cited, this did not mean Downer would be averse to sale of the division. It was considered that mining was no longer a core sector and was highly capital intensive.
The Australian said that given the improved status of mining in Australia there could be a healthy interest in the vision. According to a graph in the newspaper, mining was bringing in less work than the rail, transport, utilities and EC&M divisions, and was also well below the value today of the controlling interest in Spotless Holdings with its industrial cleaning and catering work in Australia and NZ.
DataRoom said there was speculation Downer had held talks with a private equity group, and named CHAMP as a potential party. Champ used to own the Bradken engineering group which it sold to Japan’s Hitachi.
The Australian said that at June 2017 Downer’s mining assets were worth $A836.3 million ($NZ889.8 M) while liabilities were worth $A264 M. The mining division represented about 14% of profits.
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