Downer EDI Limited has lodged a $1.2 billion takeover bid for cleaning and facilities management group, Spotless Group.
Downer went into a trading half this morning, ahead of its announcement of an all cash takeover offer of $1.15 per Spotless share, not already owned by the company.
Downer is understood to currently hold a 20 per cent stake in the company.
The offer price of $1.15 per share is 59 per cent above the 72.5c closing price of Spotless shares last night.
Grant Fenn, Downer CEO, said: “The acquisition of Spotless is a significant investment in Downer’s strategy to expand its capabilities and strengthen its position as a leading provider of services to customers in Australia and New Zealand.”
Downer has announced it is planning to raise $1.01 billion from institutional and retail investors to fund the takeover.
Spotless responds, urges shareholders to take no action
Spotless has responded to Downer’s bid, advising shareholders to “take no action”.
In a statement issued to the ASX, Spotless said the Downer offer is “highly conditional”.
Spotless said the board will evaluate the offer and Downer’s bidder statement and provide shareholders with a recommendation in due course.
“Until then, there is no need for shareholders to take action,” Spotless said.
Spotless chairman Garry Hounsell said: “The Spotless board continues to believe in the fundamental strengths of our business.”
“We will assess any proposal in the context of our announced strategy reset, including the recently announced contract portfolio restructure, which is expected to be a material driver of growth and enhanced future performance.”
Spotless said it has engaged Citi as its financial adviser and Gilbert + Tobin as its legal adviser in relation to the proposal.
Last month the embattled Spotless Group recorded a first-half loss of $358 million for the six months to 31 December 2016, amid the catering and cleaning services group’s “strategy reset”.
A class action was also filed in February against Spotless following allegations the service group mislead investors about its 2015 financial results.
The statement of claim alleges that Spotless’ financial results for the 12 months to 30 June 2015, released on 25 August 2015, were misleading and in breach of Spotless’ continuous disclosure obligations.
The claim was brought on behalf of all persons who acquired Spotless shares between 25 August 2015 and 2 December 2015 (excluding related parties, bodies corporate, associated entities and officers or close associates of Spotless).