Spotless Ltd is abandoning its bid for fellow service group, Programmed Maintenance Services.
In a statement to the ASX Friday morning, Spotless said the decision was being made because Programmed’s 2008 results had triggered a ‘defeating clause’ in the Spotless bid.
"A result of the Programmed Maintenance Services (“Programmed”) full year audited results for the year ended 31 March 2008 reporting consolidated EBIT of $54.4 million, the condition to Spotless’ bid, which requires that this figure is not less than $56 million, has been breached.
"Spotless confirms that it will not waive this condition and that accordingly it will allow the Offer to lapse on 13 June 2008,"the state to the ASX read
In the statement Spotless’ Chairman, Peter Smedley said the company was "firmly focused on creating value for shareholders and we will not overpay for any acquisition.
"There is no question that Programmed is a strong strategic fit with Spotless, but given the deterioration in the core business of Programmed that is evident from their audited full year result, we can no longer see value for our shareholders”.
Spotless’ Deputy Managing Director, Jo Farnik also said in the statement that “Our growth strategy remains intact. Our focus is to deliver the organic growth opportunities before us and we will continue to pursue acquisitive growth opportunities that fit our stated strategy and meet our stringent financial hurdles”.
Spotless singled out what it called was the "unexpectedly poor FY2008 performance in Programmed’s core Property Maintenance Services division, reporting FY2008 EBITA of $30.3 million, a fall of approximately 10% from FY2007.
"Spotless believes the soft earnings in the Property Maintenance Services division is in part indicative of the weakening demand for niche single services. It is Spotless’ view that Facility Services clients will increasingly migrate towards more sophisticated contracting relationships, like those offered by Spotless, including increased demand for integrated multi-service offerings that add value to the client’s business."
Spotless shares closed at $2.91 on Thursday, Programmed at $4.50. Both has eased since the bid was announced in late March.
