Engineering company Downer EDI has launched a $1.26 billion takeover offer for catering and contracting group, Spotless.
Downer, which delivers mining services to clients in Australia and internationally, has already secured just under 20 per cent of Spotless’ shares and has offered to buy the remaining stock for $1.15 a share, a 59 per cent premium on Monday’s closing price on the ASX.
If the deal is executed, it would expand Downer’s capabilities beyond its expertise in engineering and construction.
Spotless provides services to a variety of industries, including mining and oil and gas, where it delivers facility maintenance, catering, waste management, cleaning, security and more.
Downer plans to fund the takeover through a $1.011 billion equity raising and debt facilities.
Grant Fenn, Downer’s chief executive officer, said the acquisition of Spotless was an investment in the company’s strategy to expand its capabilities and strengthen its position as a leading service provider.
“Downer’s all cash offer provides an excellent opportunity for Spotless shareholders to realise certain value for their share, because the offer is at a substantial premium to recent trading prices,” Fenn said.
Garry Hounsell, Spotless’ chairman, said the company’s board continued to believe in the fundamental strengths of the business.
“These include a blue-chip customer base and a strong portfolio of long-term government, health, defence, and public-private partnership (PPP) contracts, as well as operating the largest commercial laundry business in Australian and New Zealand,” Hounsell said.
“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.”
The offer will need to achieve at least 90 per cent shareholder support and regulatory approval to proceed.