-Actividades de Construccion y Servicios SA's (ACS.MC) prospects of taking control of Hochtief AG (HOT.XE) Wednesday suffered a blow as Qatar Holding LLC raised its shareholding and the German construction company reported better-than-expected earnings, making its shares even more attractive to investors.
Qatar Holding, an investment vehicle of the state-run Qatar Investment Authority, raised its stake in Hochtief to above 10% from 9.1%, reducing the free float that Spain's ACS is targeting.
ACS declined to comment on Qatar Holding's move.
Last year, ACS circumvented German takeover rules to increase its stake in Hochtief above 30% without triggering a mandatory offer, which such a move normally would have required it to do. ACS has built a 39% stake in the Essen, Germany-based company and Wednesday repeated its desire to accumulate just over a 50% by the end of the first semester.
In an attempt to fend off ACS, Hochtief late last year launched a capital increase, through which Qatar Holding took a 9.1% stake. The capital increase wasn't open to other shareholders, so it diluted the stakes of ACS and others. However, it turned out to be only an inconvenience to ACS's plans.
WGZ Bank analyst Stefan Roehle expects ACS to reach a majority stake ahead of Hochtief's annual general meeting, which is planned for May 12.
The easiest way of doing so, would be if Qatar Holding would sell its stake to ACS. Ralf Doerper of WestLB said such a move was possible. He added that this would go against Qatar Holding's normal way of doing business, and that it was likely of more interest for the company that Hochtief was well positioned in the Middle East. He noted that ACS was a strong potential buyer.
Qatar Holding, which also has a stake in German car maker Volkswagen AG (VOW.XE), declined to comment. The Qataris previously had said they were neutral about a Hochtief takeover by ACS.
Hochtief isn't the only area of conflict between ACS and Qatar Holding. Qatar Holding is in the way of ACS's plans to gain control of the board of Spanish utility Iberdrola SA (IBE.MC).
Hochtief Wednesday reported a 50% year-on-year rise in net profit in 2010 to EUR288 million as sales increased 11% to EUR20.16 billion, beating analyst forecasts of EUR243 million in net profit and sales of EUR19.26 billion. It hiked its dividend to EUR2 per share from EUR1.50, above expectations for EUR1.70. Traders said there is now less incentive for investors to part with their shares.
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