Bradken shares just exploded on takeover speculation

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Shares in engineering group Bradken jumped 20% on speculation of a takeover before going into a trading halt at the request of the company.

The company later confirmed it had received a $2.50 a share bid from Koch Industries and Pacific Equity Partners.

The board of directors of Bradken rejected the offer, says it doesn’t represent fair value.

However, Koch Equity Pacific Equity Partners say the offer is compelling and represents a 35% premium to the closing price of A$1.85 on March 31.

Two private equity firms had made a $900 million takeover bid in December but pulled out in late January because of volatility in commodity and financial markets and the downturn in mining investment.

That original offer by Pacific Equity Partners and Bain Capital Asia was pitched at $5.10 share for the 90-year-old Bradken.

The latest bid is half as much, and values the company at only about $420 million, but that was before Bradken reported a loss of $92.6 million and a 12% fall in sales to $495.4 million for the first half.

Bradken’s shares jumped more than 20% to $2.35 before trading halted but eased to $2.18 when trading resumed.

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