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Lendlease is pulling out of the UK and selling its overseas construction businesses so that it can focus on its operations in Australia.

The New South Wales-based multinational has announced a sweeping restructure aiming to free up AD $4.5bn (拢2.35bn) of capital in order to pay down debt and realise value for its shareholders.

Regional management structures will be removed over the next 12 months with its construction business to be focused solely on Australia by the second half of 2025, the firm said in a strategy update published yesterday.

The move comes after four years of steadily dropping share prices with the firm鈥檚 stock having lost around half of its value since the pandemic.

Low overseas construction earnings of just 0.6% and 鈥渙verweight, long-dated鈥� projects which have been impacting security holder returns were also mentioned in the 47-page strategy document.

Delays have hit several of the firm鈥檚 biggest schemes in the UK including CO-RE鈥檚 拢700m ITV studio redevelopment, which has been stuck in planning limbo for two years, the 拢429m 120 Fleet Street job in the City of London which has been stalled by ongoing discussions with its Chinese developer and the 拢1.9bn Smithfield scheme in central Birmingham which has undergone several redesigns.

Lendlease chairman Michal Ullmer admitted that security holder returns had been 鈥減oor鈥� amid a series of structural challenges and a prolonged market downturn.

鈥淲e need to take significant action at an accelerated pace to deliver value for our securityholders, capital partners and customers,鈥� he said.

鈥淲e have announced the blueprint to position Lendlease for success, focusing on our core strengths and competitive advantages. We have thought very carefully about the necessary strategic refocus and made some tough decisions.鈥�

The firm said it would hold onto its international investment platform, the only part of the group which will remain active outside of Australia following the restructure.

Group chief executive Tony Lombardo said a 鈥渘ew Lendlease is emerging鈥� through the 鈥渄ecisive actions鈥� announced in the strategy update.

鈥淥ne that is firmly anchored in the very best of our proud legacy, but less complex, more focused and fit for purpose,鈥� he added.

鈥淭his new Lendlease will be more easily understood by our people and customers, and transparent and predictable for securityholders. 

鈥淏y reshaping the portfolio, concentrating on our core competencies in markets where we have proven we have the right to play, and the competitive advantage to win, the financial and operational risk profile will be lower, and we believe the quality of our earnings [will be] ultimately higher and more sustainable.鈥�

Lombardo said significant work on the new strategy had already been undertaken and several transactions were well advanced.

Seeking to reassure clients and overseas staff, he said the firm would not walk away from existing commitments and would 鈥渢reat our people around the world with the care and respect they deserve as our business changes.鈥�

But he said the restructure would be a 鈥減rofound change鈥� that has been based on 鈥渟ome very tough but necessary decisions鈥�.

A key part of the restructure will be the creation of a capital release unit (CRU) which is expected to divest AD $2.8bn (拢1.46bn) by the end of 2025.

There will also be a series of impairments and charges valued at up to AD $1.475bn (拢770m) pre tax in financial year 2024 that include a write down of goodwill related to the US and UK construction businesses which arose from Lendlease鈥檚 acquisition of Bovis in 1999.

Other transactions expected to be completed over the next 12 months include the sale of half of its Asia Life Sciences unit to private equity giant Warburg Pincus.