Italy-based global contractor Webuild S.p.A. has closed a deal to purchase Asia-Pacific assets of the Clough construction group for $26.8 million, following up on its cancelled attempt in early December to acquire the financially troubled Australian contractor’s entire portfolio.

Clough has been in “voluntary administration” since Webuild opted to end purchase talks with its then-parent, South Africa-based Murray & Roberts Holding Ltd. 

The new purchase deal with Clough’s administrators led by Deloitte Australia would vastly expand its market share in the region, Webuild said on Feb. 3. Pending approval by creditors, expected later this month, the deal will create a combined organization with a nearly $13-billion backlog, including projects for which both companies are preferred bidders, and about 3,000 employees. 

Integration of the two companies “guarantees the continuity of Clough’s projects and ongoing employment for 1,100 Clough employees,” said a Webuild statement. The Italian contractor claims the two firms’ potential construction contracts in Australia are estimated at more than $322 billion for the 2022-2025 period. 

A Webuild spokesperson subsequently added that the acquisition does not apply to Clough projects in other parts of the world—including the Project Traveler petrochemicals plant in Texas, a fixed-price project underway since 2019 with reports of rising costs. 

Murray & Roberts, which had owned Clough outright since 2014, reportedly faced rising costs and more than $1 billion in creditor claims—many arising from several of the subsidiary’s large fixed-price construction contracts such as Project Traveler and the and the 2,000-MW Snowy Mountain 2.0 hydro pumped storage project in Australia

Murray & Roberts noted in an October shareholder update the need for added working capital for Clough "to address the dislocation in project cash flows."  The note pointed to "margin deterioration" on at least two lump sum fixed-priced contracts, which it said was due to payment delays and supply chain disruptions

There was also no comment on whether Webuild intends to purchase additional projects from Clough’s portfolio.

Webuild and Clough have long partnered on a variety of projects in Australia and neighboring countries, including the Brisbane-Melbourne Inland Rail freight transport project and Snowy Mountain 2.0.

With the acquisition, Webuild will now assume Clough’s role in those efforts, and take over construction of two major natural gas facilities in western Australia, as well as work at an Australian naval base in Papua, New Guinea. Webuild also is handling construction of the Sydney Metro-Western Sydney Airport light rail extension and the North East Link toll road in Melbourne.

Founded in Perth in 1919, Clough is a long-time leader in Australia’s construction industry and had collaborated with Webuild’s predecessor organization in several pursuits. 

Webuild announced an offer to purchase Clough for $237 million in early November 2022, including a proposed $20-million loan to Murray & Roberts. While the deal was terminated “by mutual agreement” a month later, industry observers speculate that Webuild’s due diligence found Clough’s financial woes more unpalatable than originally thought.

Shortly after Clough entered voluntary administration in Australia under the management of Deloitte, Webuild reportedly offered to purchase Clough’s share of the Snowy 2.0 and Inland Rail projects, and would consider buying other projects as well. 

Negotiations with Deloitte continued into the new year, leading to Webuild’s announcement of the Asia-Pacific acquisition.