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On Monday Australias Transfield said it had received a takeover bid from Spanish infrastructure group Ferrovial.

The Spanish group has offered A$1.95 per share for the Australian company, valuing it at A$1 billion. Transfield management advised shareholders to restrain from action regarding the offer from Ferrovial.

Chairman of the Sydney-based company, Diane Smith-Gander said: “The board of Transfield Services has considered Ferrovial’s proposal with the company’s advisers and has formed the view that the price of $1.95 per share does not reflect the underlying value of Transfield Services shares”

Transfield said in a statement it doesnt eliminate the option of a takeover and it is willing to participate in “exploratory discussions”. However it would look for a better offer from the Spanish company.

Ferrovials offer consists of a 30% premium to the previous close of Tranfield at A$1.50. UBS analyst Greg Peirce said that the Spanish groups price was not undervaluing the shares of the Australian company and its board was “quite brave” turning it down. “I think shareholders would want this price put to them,” he said.

In a phone interview cited by Bloomberg, Simon Mawhinney who controls 19% of the Australian companys stock, said that the bid is “attractively priced”. Mr. Mawhinney is a portfolio manager at Allan Gray Pty, the biggest shareholder in Transfield. “It’s undervalued and that’s exactly why we own it” he added.

After the offer was announced publicly, Transfields share price went up 26.67% or A$0.40 up to A$1.90, striking a one-year gain of 45.04%.

Earlier this year a similar deal took place, as Spanish group ACS took control over Leighton Holdings. This shows an increasing interest in the fast-growing Australian infrastructure industry.

Transfield operates across diverse industries and is one of the biggest infrastructure development companies in Australia, providing services in its home market, New Zealand and the Americas. Earlier this year the company won a contract to manage Australia’s asylum seeker detention facilities on Manus Island, Papua New Guinea, and Nauru.

Ferrovial continues its buying spree, as last week the Spanish group joined hands with Australias Macquarie to take over airports in Aberdeen, Glasgow and Southampton. The deal was valued at £1.05 billion, including debt.

The Madrid-based company was also named preferred bidder for the motorway contract in New South Wales and has pledged to buy 6.5% stake in Aena, Spain’s national airports operator, which will be listed on the stock exchange in November.

Ferrovial SA climbed 4.31% on Friday and closed at €15.24 in Madrid. On Monday the stock was down 0.20% at €15.21 per share at 09:15 GMT, marking a one-year increase of 11.06%. The company is valued at €11.27 billion. According to the Financial Times, the 22 analysts offering 12-month price targets for Ferrovial SA have a median target of €17.58, with a high estimate of €20.00 and a low estimate of €15.57. The median estimate represents a 15.35% increase from the previous close of £15.24.

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