UGL, the global engineering, infrastructure, maintenance and property services company, has today confirmed its intention to pursue a demerger to create two standalone ASX-listed companies, one focused on global property and facility services (“DTZ”) and the other on engineering, construction and maintenance services in Australia, New Zealand and Asia (“Engineering”).
The decision to pursue a demerger follows the completion of the corporate structure review announced by UGL on 26 March 2013.
The review concluded that a structural separation of DTZ, the property and facilities management company it bought in December 2011, and Engineering via demerger provides the optimal corporate structure for both businesses.
Headquartered in Sydney, Australia, UGL operates worldwide across 52 countries employing 53,000 people. UGL chairman, Trevor Rowe, explained:
“Over the past decade, UGL has successfully grown its property services and engineering businesses to become sizeable businesses which are leaders in their respective markets. As both businesses enter their next phase of growth, the operational and strategic priorities of each business, and the associated management and financial requirements are starting to diverge. As a result, we believe a demerger is the next logical step which will allow each business to pursue their own strategic priorities and opportunities for growth.
UGL managing director & CEO, Richard Leupen said:
“Following the establishment of the global headquarters for DTZ in the United States, UGL is increasingly seeing the benefits of operationally separating DTZ and Engineering. A demerger will recognise the fundamentally different markets, geographic focus and strategic requirements of the two businesses and we believe that further benefits will result from a complete separation.”
DTZ is a leading global integrated property services company with operations in 52 countries, 45,000 people worldwide and annual revenues in excess of $2.0 billion. DTZ has a strong recurring revenue base generated by its expertise in integrated facilities management services and an attractive growth outlook. Following a demerger, DTZ is expected to qualify for inclusion in the S&P/ASX200.
Engineering is a market leader in engineering, construction and maintenance services in Australia, New Zealand and Asia. Engineering has a diversified end-market exposure across rail, resources and infrastructure projects balanced by a leading operations and maintenance capability delivering a material recurring revenue base. The Engineering business employs 8,000 people with annual revenue in excess of $2.3 billion. Following a demerger, Engineering is expected to qualify for inclusion in the S&P/ASX200.
While the timing of a demerger will be dependent on the timeframe required to prepare DTZ and Engineering to operate on a standalone basis, as well as prevailing market conditions, UGL aims to complete a demerger in financial year 2015, subject to regulatory and statutory approvals, including shareholder approval.