Downer EDI Limited has extended the deadline of its $1.2 billion takeover offer for Spotless by two weeks, with the deadline now set for mid-June.
In a statement Downer said its final $1.15 per share cash offer for the cleaning and facilities management group would close on June 14 instead of May 31.
Downer said it encouraged Spotless shareholders to accept the offer which “provides compelling value and certainty for shareholders”.
Spotless has continually recommended that shareholders reject the bid, with Spotless chairman Garry Hounsell stating earlier this month the company’s position was still unchanged.
“The directors do not believe the Downer offer represents adequate value for Spotless shareholders,” Hounsell said.
“Spotless is at an inflection point. We have a strong core defined by our market leadership position in facilities services and an attractive portfolio of recurring contracted earnings, including over $10 billion in lifetime PPP revenue.
“We are set for growth. The strategy reset is clear and we have made the investments to drive growth from this unique platform. Our business development capability has been enhanced, our contract rationalisation is underway and our portfolio oriented toward long term, high margin contracts. Our pipeline of opportunities is building and win rates are increasing,” he said.
“We remain confident that the fundamental strengths of Spotless’ core business, together with management’s execution of the strategy reset will deliver greater value to Spotless’ shareholders than the Downer offer in the medium term.”
Spotless’ Target’s Statement details the reasons that underpin the directors’ recommendation and includes reaffirmed earnings guidance for FY17, earnings guidance for FY18 and an outlook statement for continued growth into FY19.
“Shareholders have a clear choice – either accept the Downer offer which has been pitched relative to an all-time share price low allowing Downer’s shareholders to take the benefits of Spotless’ expected growth and synergies; or reject the Downer offer and continue as a shareholder in standalone Spotless and enjoy the benefits of our expected growth and strategy reset,” Hounsell said.
Earlier this month Spotless entered into a purchase agreement for Victorian linen and laundry business Cabrini Linen Service, with the acquisition set to double its laundry volumes across the state.
The deal includes a number of new multi-year healthcare laundry contracts, including an initial 10 year contract with Cabrini Hospital, and a state-of-the-art laundry facility in Melbourne’s eastern suburbs.
The acquisition is expected to be completed by July 2017.