Downer EDI has launched a A$1.26 billion takeover bid for ASX-listed outsourced laundry and cleaning services firm Spotless Group as the Australian-based infrastructure and mining firm looks to expand its operations as a vertically integrated services provider.
Sydney-based Downer is offering A$1.15 a share to Spotless shareholders, a 59 per cent premium to the 72.5 Australian cents price the stock traded at before the announcement. Downer bought a 15 per cent stake at an average price of A$1.146 yesterday, adding to its near-5 per cent holding. Spotless shares have since jumped 46 per cent to A$1.06.
Spotless returned to the public markets in 2014 in an initial public offering valuing the firm at A$1.2b, just two years after private equity firm Pacific Equity Partners took it private for A$723 million. The outsourcing firm has been languishing on the ASX after lowering its dividend payout ratio in the face of reduced earnings.
Downer said it sees an opportunity to broaden its services and open new income streams to create the largest diversified and integrated services manager in Australia and New Zealand with annual revenue of A$10.5b.
"It is aligned with our strategy and strengthens Downer's position as a leading integrated services provider to not only the resources, transport and utilities sectors, but also in health, education, corrections, defence and other areas of government," Downer chief executive Grant Fenn said in a statement. "Importantly, the Downer management team has what it takes to turn the Spotless business around and to create a highly competitive, customer-focused and successful service organisation."
