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MacMahon shares down 5% after new offer

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PERTH, Feb 19 AAP

February 19 2013, 6:23PM

Shares in construction firm Macmahon Holdings fell after it rejected the latest takeover offer from Indian-owned firm Sembawang Australia.

Macmahon has already struck a deal with Leighton Holdings over the sale of its troubled construction business and had rebuffed previous offers by Sembawang.

Sembawang, a wholly owned subsidiary of engineering and construction group Punj Lloyd, last week lodged a new offer, valuing Macmahon's construction business at $35 million.

Shares in Macmahon lost two cents, or 5.6 per cent to 34 cents.

In a statement on Tuesday, Sembawang said its existing offer remained but that it was prepared to acquire the whole of Macmahon's construction business for a price determined by an independent third party.

After meeting Sembawang in recent days, Macmahon said the new offer could not be implemented and was not superior to its deal with Leighton.

Macmahon said that while Sembawang's offer price was higher than Leighton's, it was not enough to make up for the added risks associated with the proposal.

"The proposed transaction with Leighton remains the best and only transaction practically capable of being completed," Macmahon said in a statement.

Shares in the company rose last week when the new offer from Sembawang was lodged.

Sembawang has urged shareholders to vote against the Leighton proposal at the company's upcoming general meeting.

CMC Markets chief market strategist Michael McCarthy said Sembawang would have to significantly improve its proposal if it wanted to do the deal before the end of the month.

"Sembawang's attempts to bid, pull their bid, bid for only part of it, then bid for more, then demand responses from Macmahon within a 24-hour period was quite bizarre," Mr McCarthy said.

"I don't know where Sembawang get off. They've got no rights, they're not bidding on market for any security."

Morningstar analyst Ross MacMillan said Leighton's proposal was likely to go ahead because it made more sense in terms of handing over the construction portfolio.

"Macmahon and Leighton are already working on some projects together and some of the projects involve joint ventures that are in place and ongoing," Mr MacMillan said.

"Sembawang doesn't have any operations in place in Australia so the handover of those sort of projects would be difficult."

An extraordinary general meeting of MacMahon shareholders will vote on the Leighton proposal on February 26.

By Kim Christian