The board of directors of Spotless today “reluctantly” agreed to Downer EDI’s $1.27 billion takeover after the mining services group gained a majority stake in the cleaning and catering company.
Downer EDI, which now holds 67.279% of the shares in Spotless, bid $1.15 a share in March.
The takeover will create a company with combined revenues of $10.5 billion, 55,000 employees and a market capitalisation of more than $4 billion, the largest diversified and integrated services manager in Australia and New Zealand.
The Spotless directors had recommended that shareholders reject the Downer offer on the grounds that the business would do better as an independent listed company.
“We continue to believe in the strong underlying fundamentals of the Spotless business,” says Spotless shairman Garry Hounsell.
“However now that Downer owns 67.279% of Spotless and will control a majority of the Board from Wednesday, on balance, we reluctantly recommend that shareholders accept the Downer offer.”
Downer has said it intends to seek to have Spotless removed from the official list of the ASX.
Downer, hit hard by the end of the resources boom, has been repositioning itself from the mining sector to roads and rail, public transport, utilities, communications and defence.
The company in February posted an 8.5% rise in after tax profit to $78.2 million for the half year to December. Total revenue increased 1.7% to $3.6 billion.
Downer is now targeting net profit of around $175 million for the 2017 financial year, up from $163 million previously.