The Lendlease Group (ASX: LLC) share price is down 0.6% at $6.60 after the company announced its latest move to sell parts of its business. In comparison, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.4%.
Lendlease has announced the sale of its US East Coast construction operations.
The property developer is working on a plan to simplify its organisational structure and right-size its cost base. This includes focusing on its Australian business and international investments platform and raising approximately $4.5 billion from transactions.
Today's announcement is the next step in that plan.
US sale
The company announced today it has reached a binding agreement with US construction business Consigli Construction Co for the sale of its US East Coast construction operations.
Consigli will acquire substantially all current East Coast projects and the rights to secure projects where Lendlease is in a preferred position for an estimated consideration of between $30 million and $50 million. This acquisition does not appear to significantly materially affect the Lendlease share price.
The consideration involves a profit share and 'earn out' arrangement, payable two years after the transaction is completed.
The deal will involve more than 400 people, approximately 90% of Lendlease's US construction employees, who will transition to Consigli upon completion.
Lendlease expects the sale to be broadly neutral in terms of its cash, capital and profit over the two-year period.
The company also expects to offset net losses and net cash outflows — including working capital, legal, transaction and project costs in FY25 and FY26 — by net cash inflows and net profits in FY27 from the takeover consideration.
The takeover is not a done deal yet, with the transaction subject to conditions, including third-party consent required. Completion is targeted by the end of the FY25 first half, with the final settlement two years after completion.
Lendlease noted that the deal involved selling projects rather than entities, so the ASX share retains the business's liabilities, including delivered projects. It expects to manage this risk over time, including through insurance coverage and existing provisions as required.
Management comments
Lendlease CEO Tony Lombardo said:
This transaction is another important step in simplifying Lendlease as we look to lower our risk profile and increase securityholder returns. It's a positive outcome, both for our US construction team, and for our valued customers, and continues to demonstrate focussed execution of our strategy.
We continue to progress the divestment of our UK construction operations, to further simplify the Group with the objective to be less complex, more focussed, and ultimately more profitable.
Lendlease share price snapshot
The Lendlease share price is down more than 10% year to date and has fallen 14.6% in the past 12 months.
