MADRID - Spain's biggest public works group ACS reached a key milestone on Tuesday in its bitterly fought battle to swallow up German rival Hochtief and build Europe's biggest construction company.

ACS, led by Real Madrid football club chairman Florentino Perez, said it had acquired 30.34% of Hochtief, an emblematic German firm which had fiercely defended itself against the Spanish bid.

Under German law, ACS can now hike its stake up to 50% without making public announcements, opening the way for it to take a majority stake and become the third largest public works group worldwide.

ACS's global prospects and debt-laden balance sheet, it had €9.08 billion

($13.3 billion) in net debt on September 30 last, would be strengthened by the acquisition of the financially more robust Hochtief.

"ACS will split up Hochtief in the end to relieve the hidden values and get access to the solid finances," said Alexander Groschke, an analyst at German regional bank LBBW.

Hochtief chief executive Herbert Luetkestratkoetter has fought the Spanish takeover since it was launched unexpectedly December 1.

Frank-Walter Steinmeier, parliamentary head of the opposition Social Democrats and former German foreign minister, lashed out at Chancellor Angela Merkel's government for not getting involved in the takeover bid.

"The federal government has not lifted a finger," Steinmeier said in an interview with the Westdeutsche Allgemeine Zeitung daily set to appear on Wednesday.

"It will be the workers who suffer the consequences."

Merkel's government has stopped short of getting involved, saying only that it wants Hochtief's headquarters to remain in Germany.

The offer closed December 29, but under German law the ACS offer is now re-opened from January 5-18 for Hochtief shareholders who had previously turned it down.

In an apparent reference to this period, a Hochtief spokesman said: "We will not know exactly how big the ACS stake is until the end of January."

In late afternoon trade, ACS shares were 2.10% lower at €34.46 while Hochtief was down 0.69% at €63.82.

The ACS announcement caps a bitter struggle with Hochtief.

In an attempt to fend off the Spanish, it agreed December 6 for Qatar Holding to buy a 9.1% stake in Hochtief for about €400 million, diluting ACS's stake.

Hochtief's board then formally rejected the offer December 15.

ACS, in reply, sweetened its offer to propose swapping nine of its shares, instead of eight, for every five shares of Hochtief, reportedly valuing the company at close to €5 billion.

And the German firm's defence then took a body blow when major US-based shareholder Southeastern Asset Management said December 16 it had lost confidence in the Hochtief management and was selling roughly half of its 4.84% stake in the company to ACS.

ACS owned around 27.2% of Hochtief when it announced the offer and with the Southeastern Asset Management stake it already had close to 30% of the German firm.

Hochtief appeared to have accepted the inevitable success of the ACS offer when it reportedly made an agreement last week with its creditors smoothing the way for the Spanish entrant.

Source: AFP