The board of directors of Spotless says the unsolicited takeover offer by mining services company Downer EDI is “hostile” and “opportunistic”.
The cleaning and catering company is currently doing a detailed evaluation of the $1.15 a share offer valuing Spotless at $1.272 billion.
Spotless shares are trading today at $1.082 and Downer EDI at $5.66, down 2.2%
The acquisition would create the largest diversified and integrated services manager in Australia and New Zealand.
“While the board’s review is not yet complete, it is our belief that the highly conditional offer is opportunistically timed to take advantage of short-term factors — particularly in the context of management’s strategy reset,” says Spotless chairman Garry Hounsell.
He says the Spotless board is unwavering in its belief in the fundamental strengths of the business, including a strong portfolio of long term government, health and defence contracts.
Spotless says the offer was announced when company’s share price was at a historical low due to short selling driven in part by market misconceptions that the business needed equity funding.
Spotless in February posted a $358 million half year loss, including writedowns of $391 million associated with restructuring.
Full year profit is forecast to be between $80 million and $90 million.