CIMIC Group Ltd (ASX: CIM) could be about to take over Macmahon Holdings Limited (ASX: MAH) as the construction, engineering and mining services company, clears up its smaller holdings in ASX-listed companies.

Since Cimic – ex Leighton Holdings – installed new management from its Spanish parent Actividades de Construccion y Servicios S.A. (ACS), the company has streamlined its operations, sold off what it regarded as non-core operations and now appears to be cleaning out the relatively small holdings it has in ASX-listed companies.

Earlier this week, Cimic announced a hostile takeover bid for the remaining shares in construction, engineering and mining services company Sedgman Limited (ASX: SDM). The offer price was $1.07 per share – 35% above the last closing price of Sedgman’s shares on January 12, 2016.

That follows its November 2015 bid for home builder and construction company Devine Limited (ASX: DVN) in which it now holds just under 60%.

Before Cimic streamlined its operations, Leighton Holdings was virtually just a holding company for a number of companies that competed against each other, including Leighton contractors, John Holland and Thiess. Construction projects have been moved under the former Leighton contractors, John Holland was sold off while Thiess was made responsible for the mining contracts both in Australia and internationally.

Two other groups were also formed – Public/Private Partnerships (PPP) and an Engineering group, along with a smaller commercial & residential construction business and Cimic’s 45% holding in Al Habtoor Leighton LLC – a United Arab Emirates construction business.

The question now is what will Cimic do with its 19.6% holding in Macmahon Holdings? Mopping up the 80% of Macmahon should be a very easy bite with a market cap of just $109 million compared to Cimic’s $7.7 billion. Not only that, but as at the end of June 2015, Macmahon had $74 million in net cash – effectively valuing the rest of its business at $35 million, despite net assets of $225 million and an order book of more than $1 billion. That should make Macmahon attractive to Cimic as a tasty morsel.

Foolish takeaway

I expect Cimic to act on its holding in Macmahon at some stage – whether it finds a buyer for its holding or launches a takeover – but that could be some time down the track. Interestingly, Forager Funds have been buying up shares in Macmahon recently and now hold 7.36% of the company.

Motley Fool Pro is now open to new members

Our most comprehensive and innovative ASX investment service -- has reopened for a brief time, to accept new members. That means you've got the chance to follow along as one top investor puts $1,000,000 of The Motley Fool's own money to work...all in ASX stocks. But to get YOUR front-row seat, you must act NOW. (Please note: just 1,000 new member seats are available.)

Click here to claim YOUR invite!

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.