Construction company CIMIC grabbed a 13.8% on-market stake in engineering group UGL and then launched a full $524 million takeover bid.
CIMIC, formerly called Leighton, is offering $3.15 a share.
UGL shares were up 48% to $3.17. CIMIC shares initially jumped about 2% but later eased to $27.26, about flat.
UGL in August reported a full year loss of $106.3 million, mainly due to writedowns on the value of projects. Revenue was down 3.6% to $1.94 billion.
The board of directors at UGL urged shareholders to take no action until the company had time to consider the offer.
CIMIC, controlled by Spanish group ACS, says it already has Foreign Investment Review Board approval.
The company believes UGL’s competencies are complementary.
CIMIC says it intends to conduct a strategic review of UGL’s businesses to drive efficiencies and improvements to project delivery.