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Leighton and certain Apollo funds agree to form 50:50 Services investment partnership

LEIGHTON Holdings, the parent company of SGX-listed Leighton Finance (USA) Pty Ltd, announced that it had entered into a binding agreement with funds managed by affiliates of New York-listed Apollo Global Management (Apollo) to form a 50:50 services investment partnership.

The partnership will comprise the merged operations and maintenance services businesses of: Thiess Services, which includes communications, energy solutions, asset and infrastructure services, and environmental services; and Leighton Contractors Services which includes Visionstream and Infrastructure Services.

Apollo, a leading global investment management firm with US$164 billion in assets under management, has experience in successfully partnering with global corporates across the industries in which Leighton provides services.

The transaction will be done at a price of A$1.075 billion (S$1.15 billion) - a price which represents an enterprise value for 100 per cent of the assets. Out of this, the transaction price will include approximately A$700 million in cash proceeds, which will reduce Leighton Holdings' gearing by around 10 percentage points.

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Leighton Holdings executive chairman and CEO Marcelino Fernández Verdes said: "By choosing to partner with funds managed by Apollo, a leading global investment management firm, we gain access to Apollo's expertise in creating a single, integrated and efficient business, which will be better able to compete in the Australian market place. Moreover, we will continue to have exposure to the growing services market with its longer-term contracts and steady cash flows, and we will be positioned to allocate funds to the improvement in our gearing and balance sheet, and to the financing of future growth."

The Services Business will be one of the largest services firms in Australia with combined 2014 revenue of more than A$2.2 billion, approximately A$4.02 billion of work in hand and approximately 6,400 skilled employees.