Murray & Roberts (M&R) wants to increase its stake in Australian engineering and contracting company Clough to 50,1% in the next three to four years, but does not plan to take full ownership or delist it from the Australian stock exchange at this stage.

Murray & Roberts, SA's secondlargest construction group, said at the release of its annual results last week that it would raise its 4,9% stake in the family-controlled Clough to 29% in a R380m deal.

Murray & Roberts CE Brian Bruce yesterday said the group would pay a fair price for Clough, whose profits plummeted last year, despite some media reports in Australia which suggested that at A0,68, Murray & Roberts would get the stake for a steal.

The acquisition would give Murray & Roberts a platform to expand its activities to southeast Asia, and forms part of its new five-year global expansion strategy.

It would also mark Murray & Roberts' entrance into the lucrative oil and gas sector, and further strengthen its mining construction capability after its recent acquisition of Cementation.

Murray & Roberts said it would ask minority shareholders to waive their right to a mandatory offer. In terms of Australian regulations, such an offer had to be made once the group reached the 20% shareholding level.

"If they reject the offer, the deal doesn't happen," said Bruce.

He said Murray & Roberts wanted to maintain a strong Australian shareholding component for various reasons, including the sharing of risk. "This is not a takeover, it's a partnership," he said.

The South African group could acquire up to a 6% of Clough each year in terms of the Australian Corporations Act.

The transaction also makes provision for Murray & Roberts to purchase further shares from McRae Investments which represents the Clough family interests in Clough should it be unable to easily increase its stake in Clough on the open market.

Commenting last week, Bruce said there was "a lot of work to do" at the Australian company, but he believed Murray & Roberts could extract good value from it.

Clough had revenues of A$832-million (about R4-billion) in the year to June about half the size of Murray & Roberts, whose revenue came to R8,4bn in the same period.

Clough posted a loss of A$9,5-million last year, but turned around to post a A$16,2-million profit in the year to June.

The company said of its 2003 results that volumes increased but this was not matched by risk and process control improvements.

The company's order book was still at a low A$408-million in June 2004, against A1,3bn in June 2002 .

Most of Clough's revenues are from the oil and gas sector outside Australia. It has identified Indonesia, India, Australia and Thailand as countries in which it aims to win oil and gas contracts.

Murray & Roberts described Clough as one of Australia's largest multidisciplinary engineering and contracting groups, operating globally in oil and gas, petrochemicals, minerals, infrastructure and property sectors.