Spotless shares lift as suitor declares bid unconditional
SHARES in facility manager and MCG caterer Spotless Group have lifted slightly after the engineering company stalking it declared its takeover bid unconditional.
Shares in Spotless closed 0.9 per cent higher at $1.15, while its predator, Downer EDI, advanced 1 per cent to $6.11.
Downer yesterday waived the defeating conditions to its offer and introduced accelerated payment terms in a move to boost its stake in Spotless, which stood at 36.44 per cent at the end of last week.
Downer has maintained a June 29 close for its $1.15-ashare offer, which is final and values Spotless at $1.3 billion.
The company urged Spotless shareholders to accept its offer without delay, saying it provided certain and compelling value.
It also said that even though Spotless believes its strategy to improve performance is showing early signs of success, the company’s forecast net profit before one-off items for 2018 would still be materially lower than its 2016 net profit.
“If the offer is unsuccessful and no superior proposal emerges, the Spotless share price is likely to trade at a substantial discount to the offer,” Downer said in a statement.
Downer last week said it would waive the defeating conditions and introduce accelerated payment terms if it achieved a 50 per cent stake in Spotless by June 16 but reserved its right to waive the defeating conditions at any time.
Downer’s board met Sunday to consider its position, with options including extending the bid deadline beyond June 29, or sticking to it and declaring it unconditional even without the previous 50 per cent acceptance hurdle.
It has already completed a major capital raising to fund the bid but risks emerging with a minority position and diluted earnings per share unless it can secure full ownership.
Spotless directors continue to oppose the bid and have issued 2018 earnings guidance and reaffirmed 2017 earnings guidance in a bid to reassure investors disillusioned by three previous downgrades.
Spotless is in the middle of a major change in strategy. Last week it sold a group of shortterm New Zealand contracts and extended the maturity on $300 million of debt.