Wilson Bayly Holmes-Ovcon (WBHO), one of the few construction companies left standing during an industry-wide slump in SA, could be caught up in a diplomatic and trade feud between China and Australia.
WBHO said the $200m (R3bn) sale of its 88% stake in Australian unit Probuild fell through because the buyer received advice that the Australian government would reject the deal on national security grounds.
Although WBHO has not disclosed the identity of the buyer, only describing it as a "major international construction and civil services company", Australian media house The Australian has reported that a Chinese state-owned company had put in the unsolicited offer.
The failed deal comes amid strained relations between the two countries, with Beijing imposing a number of tariffs on a range of Australian commodities after Canberra called for an international inquiry into the origins of SARS-CoV2.
Probuild describes itself as a national leader in large residential and retail projects with thousands of apartments under construction and work on a vast retail property under way, making it an important player in any effort by the Australian government to revamp or build public infrastructure.
For WBHO, the withdrawal of the offer for Probuild robs it of an easy payout from the business, which was partly responsible for more than R500m in annual operating losses.
The losses related to its massive roads project in Melbourne, which WBHO has previously described as its biggest mistake in 50 years.
Still, the company said it is optimistic about the fundamentals of Probuild and its prospects in Australia, a market it entered in 2001 and one from which it generates 57% of its annual revenue of R43bn.
"WBHO remains optimistic about the fundamentals of Probuild and its prospects in the Australian market, and continues to assess all potential opportunities for Probuild to maximise shareholder value and the value and potential of Probuild," the group said.
WBHO shares fell 1.89% to R82.75, having fallen nearly 40% over the past 12 months.
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