Bilfinger Berger cancels IPO of Australian unit

Bilfinger Berger has pulled the plug on what would have been the second-largest IPO on the Australian stock market so far this year. The IPO of Valemus, the German firm’s Australian construction business, was expected to raise proceeds of between A$1.22 billion (€822 million; $1.03 billion) and $A1.39 billion.

Valemus: 'asking price cannot realistically be achieved,' Bilfinger says

Announcing the postponement, Herbert Bodner, chairman of the executive board at Bilfinger Berger, said: “Bilfinger Berger’s asking price for the Australian business cannot realistically be achieved in light of the current adverse conditions on the stock exchange. We are not under pressure to sell and have always emphasized that we would not part with our successful Australian business at an undervalued price.”

The statement added that: “Postponing the initial public offering does not change the fundamental decision to sell the Australian subsidiary and, thereby, to significantly reduce the volume of the construction business.”

The planned share offering represented a price of between 10.5 to 12 times Valemus’ forecast 2010 earnings before interest and tax, which are expected to rise by close to 10 percent this year to A$178 million, Bilfinger Berger said.

Valemus is Australia’s second-largest construction company behind market leader Leighton, majority-owned by competing German infrastructure group Hochtief. It includes Abigroup, Baulderstone and Conneq, which specialise in engineering, construction, asset management and maintenance operations. Valemus’ forward order book amounts to close to A$6 billion.

The IPO was first announced in January this year as part of the group’s strategy to reduce the output volume of its construction business from the €6 billion recorded in 2008 to around €2 billion in the medium term.

Earlier today, the Australian Stock Exchange reached a 12-month low in early trading.