SYDNEY: Spanish infrastructure giant Ferrovial SA tore up a sweetened $830 million (Dh3 billion) offer for Australia’s Transfield Services Ltd, putting the contractor under pressure to show it can thrive as the country’s mining boom grinds to a halt.

Transfield shares plummeted up to 18 per cent on Monday in response to the Madrid-based firm’s pullout. Ferrovial said late on Sunday it was ending takeover talks for good after the target rejected a new, improved offer as not being enough.

The shares fell to A$1.63 ($1.33) by midafternoon, their lowest since before Ferrovial made its initial A$1.95-per-share approach two months earlier, and 18.5 per cent under the Spanish’s firm second, A$2-per-share offer.

The Sydney-based services firm, which gets a third of its revenue from the mining industry, must now convince investors it can increase profit despite massive spending cuts in a sector grappling with sharp falls in key oil and iron ore prices.

“We are going through a cyclical downturn in the mining and energy sectors ... so I wouldn’t expect the share price of Transfield to significantly increase in the short term unless there is a further offer from some other foreign engineering and construction group,” said Morningstar analyst Ross Macmillan.

A week earlier, Australian-based construction group Leighton Holdings Ltd sold half of its services unit to New York-based Apollo Global Management LLC in a move to cut debt and exposure to the mining sector.

The spurned Transfield takeover also sets back Madrid-based Ferrovial’s own quest to diversify away from the crisis-hit Spanish construction sector and build up operations in Australia, which would have grown significantly if it bought Transfield.

In a statement, Ferrovial said it took “a very long-term view” in raising its offer to win the approval of Transfield’s board. Without that approval, it was unwilling to proceed.

“Ferrovial Services has undertaken the limited due diligence available and concluded that there were a number of issues that impacted value,” it said in a statement.

In August, Transfield returned to an annual profit and said it expects to raise earnings more than analysts had expected in financial 2015, helped by a contract running the country’s offshore immigration detention centres.

“It’s now really up to management to show that $2 was not enough for the company,” said Simon Marais, managing director of fund manager Allan Gray Australia Pty Ltd, Transfield’s biggest shareholder with 18.7 per cent of its shares.