The $1.3 billion bid for Spotless from Downer EDI is starting to get a little messy as Downer struggles for traction with acceptances.
Downer late last week extended its $1.15 a share offer and indicated it could live with a lower than 90% acceptance level. Reaching the 90% acceptances level triggers compulsory acquisition of the outstanding 10% and would give Downer full control.
Last last week Downer revealed that an institutional acceptance facility, opened last month only contained acceptances of 3.8% of Spotless’ shares. Downer holds 23.8% after including a 15% stake bought before the bid and derivative exposure worth 4.9% of the target.
Yesterday Spotless issued a statement telling shareholders to again ignore the Downer offer.
Spotless Chairman, Garry Hounsell said: “Downer is clearly seeking to stimulate some momentum for their offer but, as we have maintained from the start, this offer does not reflect adequate value.”
“Shareholders have a clear choice – accept Downer’s offer, or back the Board’s considered judgement that there will be greater value in the medium term by remaining a Spotless shareholder.”
“The Spotless Directors were appointed by shareholders to exercise their best judgement to act in the best interests of all shareholders and maximise shareholder value.”
"The Spotless Board is of the view the Downer offer represents inadequate reward for the strategic value and prospects of the business. Spotless shareholders should preserve this value for themselves.
"Spotless also estimates that Downer shareholders will benefit from material synergies worth $0.11 to $0.33 cents per Spotless share – approximately 10 – 30% of the offer price,“ Spotless said.
“The Spotless Directors continue to unanimously recommend that shareholders REJECT the Downer Offer,” Mr Hounsell said.
In exercising its judgement, the Board continues to believe that the Downer Offer is not in the best interests of all shareholders and does not represent adequate value.
“We have been clear in our guidance and outlook for growth and the business is demonstrating positive momentum, ” the chairman said.
In its statement late last week Downer EDI said it would waive outstanding conditions if it reaches 50% of Spotless shares by June 16, and provide accelerated payments from June 19.
It has also extended the closing date to June 29.
The change means Downer could emerge as a controlling majority shareholder in a Spotless at the close of its bid.
