Lendlease outlines sale terms for US East Coast construction arm
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The news: Lendlease has agreed to sell its US East Coast construction operations to US construction firm Consigli Construction, as part of ongoing efforts to divest its international assets.
The numbers: Consigli will acquire all of Lendlease's current East Coast projects, as well as the rights to secure projects "where Lendlease is in a preferred position", for an estimated fee of $30 million to $50 million.
The transaction comprises a profit share and earn out arrangement payable two years post completion.
More than 400 people, representing around 90% of Lendlease's US construction employees, will transition to Consigli upon completion of the deal.
The context: Lendlease said the sale is expected to be "broadly neutral" in terms of cash, capital and profit over the two-year period. Net loss and net cash outflows including working capital, legal, transaction and project costs in FY25 and FY26 are anticipated to be offset by net cash inflows and net profits in FY27 from the deal.
The transaction is subject to conditions precedent including third-party consents, with completion targeted by the end of the first half of FY25 and final settlement two years after completion.
Lendlease said the deal is a sale of projects rather than entities, with Lendlease retaining the liabilities for the business, including projects that have been delivered. It will expects to manage future risk, including through insurance cover and existing provisions as required.
Earlier this year, the real estate giant outlined a new strategy to offload $4.5 billion worth of assets from its international operations, simplify its management structure and undertake cost cuts.
What they said: "This transaction is another important step in simplifying Lendlease as we look to lower our risk profit and increase securityholder returns," said Lendlease group CEO Tony Lombardo.
"It's a positive outcome, both for our US construction team, and for our valued customers, and continues to demonstrate focussed execution of our strategy," he said. "We continue to progress the divestment of our UK construction operations, to further simplify the group with the objective to be less complex, more focussed, and ultimately more profitable."
The source: ASX announcement
