Broadspectrum, the company formerly called Transfield Services, which runs Australia’s offshore asylum seeker detention centres in Papua New Guniea and Nauru, now thinks a takeover bid from Spanish infrastructure company Ferrovial is a good idea.
Previously Broadspectrum’s board of directors said the bid, valuing the company at $768.69 million, was too low.
Now, the directors recommend shareholders accept Ferrovial’s $1.50 cash a share offer. On the ASX, the shares jumped 32% to $1.48, just below the offer price.
The change of heart came about after a ruling by the Supreme Court of Papua New Guinea that the detention of asylum seekers on Manus Island was illegal under the country’s constitution.
PNG prime minister Peter O’Neill says the detention centre will be closed.
Broadspectrum’s board of directors say the Ferrovial offer provides increased certainty to shareholders and represents a 43% premium to the closing share price on Wednesday.
“The board has advised that the impact of the Supreme Court’s decision and the subsequent statement by the Prime Minister of Papua New Guinea has increased the level of near-term uncertainty to its contract with the Department of Immigration and Border Protection (DIBP), and future earnings that may be derived from it,” the company said in a statement.
The company has had its $1.2 billion contract running Australia’s detention centres in Nauru and Papua New Guinea extended by 12 months but is competing with one other company for a new contract.
Broadspectrum posted a statutory profit of $25 million, up from $8.4 million the year before, for the half year to December. Underlying profit of $27.9 million was up 54%.
Transfield changed its name to Broadspectrum after its founding family withdrew rights to use the Transfield name.