Spotless (ASX:SPO) Board advises shareholders should WAIT and take no action in respect of the Downer Offer
The Spotless Board has today (3 April) reiterated that shareholders should WAIT and TAKE NO ACTION in response to the recent unsolicited Takeover Offer (the “Offer”) received from engineering and management services firm Downer EDI Limited (ASX: DOW, or Downer).
Chairman Garry Hounsell said that, "While the Board’s review is not yet complete, it is our belief that the highly conditional offer is opportunistically timed to take advantage of short-term factors – particularly in the context of management’s strategy reset.”
“The Spotless Board is unwavering in its belief in the fundamental strengths of our business. These include a blue chip customer base and a strong portfolio of long term Government, Health, Defence and PPP contracts. We will assess any proposal in the context of our announced strategy reset. The strategy reset is expected to be a material driver of growth and is already delivering results, including increasing win rates, and a substantially increased pipeline of quality opportunities.”
While awaiting the Board’s full assessment and recommendation on the Offer from Downer, shareholders should note:
- The Offer is hostile and opportunistically timed to take advantage of price weakness caused by short-term factors – particularly in the context of management’s strategy reset. The Directors believe that shareholders should have regard to the longer term as well as shorter term share prices when contemplating the merits of the Offer.
- Management and Board have a clear plan to deliver earnings growth and long term value to our shareholders and we are making progress. The recently announced contract wins and our expansion of key health contracts are testament to this.
- The Offer does not recognise the strength of our core business and the strategic and financial value of our business to Downer. We are the market leader in Australian and New Zealand Facility Services and Downer has recognised the strategic and financial value it sees in Spotless in its communications to Spotless and Downer shareholders to date.
- The Offer is highly conditional and not certain to proceed as it is subject to a number of third party and regulatory approvals which are outside of both Downer’s and Spotless’ control
- Coltrane Asset Management is the Company’s second largest shareholder and holds 10.37% of shares on issue. Coltrane has indicated to the Company that its present intention is to reject the Offer.
Key conditions of the Offer from Downer include:
- A 90% minimum acceptance condition (including Downer's existing holding).
- No reduction to the FY17 earnings guidance.
- Financiers to Spotless’ debt facilities providing all required consents to, and waivers and releases (as applicable) in respect of certain rights arising from Downer acquiring Spotless shares, a change of control of Spotless or the announcement of Downer's offer.
- All necessary regulatory approvals, including New Zealand Overseas Investment Office.
- Other conditions including no regulatory restraints and no Spotless prescribed occurrence.
- No material acquisitions, disposals, or significant events.
- No termination of the Downer underwriting agreement.
Investor and analyst contact:
General Manager, Investor Relations
T +61 2 9816 9281
M +61 419 684 900
Corporate Communications Manager
T + 61 7 3908 6347
M + 61 418 970 778