Why Leighton's latest shuffle in directorship was 'too dramatic'

"It looks like an overreaction".

According to the Commonwealth Bank of Australia, the recent events at Leighton Holdings was a "lot of drama for a Friday."

LEI announced the resignation of its Chairman and two non‑executive Directors. Subsequently, LEI issued a release stating the remaining directors do not support the views of the resigning directors.

Here's more from CBA:

Share price reaction. This looks like an overreaction to existing governance concerns, where many people in the market already believed the board to lack independence despite minority representation from Hochtief. In our view, it is not surprising that after displacing the Chairman and CEO at Hochtief, ACS would then look to reposition the Leighton Board.

Possible credit implications. After market, S&P placed LEI on ‘CreditWatch Negative’. This stems from S&P’s interpretation of the existing governance arrangements, which it believes justified ‘some limited separation of the credit quality’ between LEI and Hochtief / ACS. This is now under review. S&P highlights it ‘could lower the rating if it felt that the control exerted by the parent meant that we could treat Leighton as an integrated subsidiary of the Grupo ACS group’.