While the QBE-IAG love affair could very well be decided for the time being later today, Spotless Group’s desires for rival services group, Programmed Maintenance Services will linger at least until June 13.
Spotless extended its offer until 7 pm Eastern Time on that day in a statement to the ASX yesterday, instead of the previously announced close of May 26.
"In light of the fact that Programmed’s FY2008 audited results are not due to be released until later this month, Spotless has today extended the offer period so that it will now close at 7.00pm (AEST) on 13 June 2008," Spotless said in a letter to Programmed’s shareholders.
"If the audited results are in line with Programmed’s forecasts provided in its Target’s statement, then Spotless believes that this will be a disappointing result for FY2008," Spotless chairman Peter Smedley said in the letter.
"The extension to the offer period will provide you with additional time to consider Programmed’s annual results in the context of Spotless’s offer."
Spotless said it held 13.81% of Programmed’s ordinary shares as at the extension of the offer, against 13.24% at the date of the offer.
Programmed will release its full year results on May 28.
A couple of hours after the SPT statement, PRG hit back with yet another missive to shareholders urging rejection.
"Programmed Maintenance Services Limited (ASX:PRG) notes Spotless’ extension of its unsolicited offer for the company and repeats its recommendation to shareholders to REJECT the offer and take no action.
‘The offer does not reflect Programmed’s strong business model and growth potential,’ said Mr Chris Sutherland, managing director.
”Programmed is well positioned for continued growth and is projecting approximately 15% earnings per share (pre-amortization) growth in the current financial year ending 31 March 2009.
‘"We have a record of steady growth over many years. Our business model is built around our ability to recruit, retain and deploy a skilled workforce, which was significantly enhanced by the merger with Integrated last year.
"’The model is robust due to the diversity of our operations across our Property Maintenance, Facilities Management, Workforce (recruitment and labor hire) and Marine (vessel manning and management services) divisions, together with our broad range of customers in different industrial, manufacturing, oil and gas and mining sectors."
That reference to the 2008-09 result from PRG sort of confirms the suggestion in the Spotless statement that the result for 2007-08 will be down.
Programmed is trying to avoid mentioning the immediate financial results while promising upside in 2009.
Spotless has focused on that area and yesterday reiterated that its offer was highly attractive because its shares were "great value at the current share price", because Spotless had significant potential to be re-rated and it was offering "significant value and an attractive premium" to Programmed shareholders.
"On its own, Programmed will remain a small, niche services player with a challenged business model," Spotless said.
It said it was offering a substantial cash amount in a time of equity market volatility, Programmed’s share price would likely fall in the absence of the offer and the offer would allow Programmed shareholders to share in the "potential significant upside of the merged group".
The Spotless offer comprises 1.620 of its shares per Programmed share, or $1.50 in cash plus 1.223 Spotless shares per Programmed share, or $3.00 in cash plus 0.825 Spotless shares per Programmed share.
In Programmed’s target’s statement, released on May 8, the company indicated that earnings before interest (EBIT) for the full year to March 31, 2008, were forecast to be $53.5 million on an unaudited basis.
Programmed also forecast a net profit of $27.1 million for fiscal 2008.
In its May 8 response to the release of Programmed’s Target statement, Spotless said that it was "disappointed with Programmed’s unaudited EBIT forecast for the year ended 31 March 2008 of $53.5 million, which is approximately 10% below the median of broker forecasts of $59.6 million before the offer was announced.
"Spotless notes that its offer includes a condition that the consolidated EBIT of Programmed for the year ended 31 March 2008 is not less than $56 million, which was at the low end of broker forecasts before the offer was announced. If Programmed’s actual audited results for the year ended 31 March 2008 are consistent with the unaudited forecast results, Spotless would be entitled to allow the Offer to lapse."
Spotless shares eased 9c to $3.46 and PRG rose 3c to $5.00. The PRG price is still well under the value of the various SPT offers.
