Brisbane-based Campbell Brothers is to merge with testing group, PearlStreet Ltd after lifting its initial 56 cents a share offer price significantly.
Campbell yesterday revealed an agreed deal with PearlStreet with a new offer price of 75 cents a share.
The new price values the target company at $56.33 million.
Campbell, which offers laboratory and technical services and makes cleaning and chemical products, told the market yesterday morning of the higher offer PearlStreet, which services the energy sector.
Campbell offered 56 cents a share for Perth-based PearlStreet, the largest `non destructive testing’ (NDT) services provider in Australia, on October 1.
The deal was rejected the same day as PearlStreet’s CEO and major shareholder had been in talks with a private equity group about a proposed deal.
But talks since then have seen a deal done.
"The acquisition of PearlStreet will provide Campbell Brothers with an excellent vehicle to grow its presence in the NDT market, and will complement our existing portfolio of testing businesses," Campbell managing director Greg Kilmister said in a statement yesterday.
Queensland-based Campbell said its offer represented a total consideration of $108.3 million: $63.7 million for equity – including shares and options – and $44.6 million for debt.
The October 1 offer valued PearlStreet at $86 million.
Campbell had also announced a $196 million rights issue the same day to be made to shareholders in the ratio of one for six at $22 each.
PearlStreet shareholders will also retain the company’s final fiscal 2009 dividend of one cent per share.
"The board unanimously recommends PearlStreet shareholders accept Campbell Brothers’ proposed offer, in the absence of a superior proposal," Pearlstreet chairman David Eiszele said.
"Campbell Brothers is well placed to take the PearlStreet business to the next stage of its growth."
PearlStreet’s directors plan to accept the offer in respect of the shares they own or control.
As a result of the offer, Pearlstreet will withdraw its recommendation for a previously announced recapitalisation proposal with Catalyst Investment Managers Pty Ltd.
The Campbell offer is subject to conditions, including a minimum 90% acceptance condition.
Campbell shares yesterday rose 97 cents to $28.91, about where they were on October 1 after the first bid was announced.
PearlStreet provides testing, inspection, and asset care services to the energy, resources and infrastructure sectors and has more than 500 employees across Australia, including engineers, scientists and technicians.
It will be integrated into Campbell’s ALS Laboratory group’s testing business.
