GLOBAL – Australian engineering company UGL has announced it will demerge – separating real estate and engineering – in a move that will see property enterprise DTZ trading once again as a standalone business.
UGL said the demerger would create two separate companies listed on the Australian Stock Exchange.
One – DTZ – will focus on global property services, while the other – Engineering – will focus on engineering, construction and maintenance services in Australia, New Zealand and Asia.
Richard Leupen, managing director and chief executive at UGL, said: "A demerger will recognise the fundamentally different markets, geographic focus and strategic requirements of the two businesses, and further benefits will result from a complete separation."
He said the split would give investors the chance to manage the diversification of their investments better by giving them a choice of a global property services company and a leading Australasian engineering, construction and maintenance services company.
UGL said it would focus on actively reducing gearing over the next 12-18 months to make sure DTZ and Engineering had sustainable capital structures once on their own.
"While we will proceed as quickly as possible to prepare the businesses for a demerger, during the preparation phase, we will remain focused on executing the respective growth strategies for each business," Leupen said.
UGL acquired DTZ from administrators in December 2011.
A demerger was widely expected after UGL announced a restructuring review a few months ago.
UGL said the review analysed various alternatives for the future of the company, and concluded that separating DTZ and Engineering would give both businesses the best corporate structure.
UGL said separation would allow each business to have an independent capital structure and dividend policy to suit their operational and financial structures.
Independent corporate and financial structures will now be created for both businesses including separate boards of directors and management teams.
DTZ, which employs 45,000 people worldwide and has a turnover of more than $2bn (€1.5bn), is expected to qualify for inclusion in the S&P/ASX200, it said.
UGL aims to complete the demerger in the 2015 fiscal year, subject to regulatory, statutory and shareholder approvals.