Oh, there must be a takeover rejection in the air.
Transfield Services (TSE), which is edging away from would-be Spanish bidder, Ferrovial, has upgraded its annual earnings guidance.
Chairman Diane Smith-Gandertold told yesterday’s AGM in Sydney that earnings so far this financial year were well ahead of the same time 12 months ago.
“The company’s financial position continues to strengthen, while our operating model is providing a clear focus on strategic delivery,” she said yesterday.
As a result, the infrastructure and maintenance firm has lifted its guidance for full year underlying earnings to between $260 million and $280 million.
That’s up just under 10% from August’s forecast earnings before interest, tax, depreciation and amortisation of between $240 million and $260 million.
It’s also well above the actual underlying EBITDA figure for 2013-14 of $217 million.
The shares edged up 2.1% to $1.90.
TSE YTD – Transfield upgrades earnings
Some analysts reckon Transfield’s board is trying to work up courage to reject the $1 billion approach from Ferrovial.
Transfield said Ferrovial’s indicative takeover bid of $1.95 per share did not reflect the underlying value of the company’s shares and its "strong positive trajectory across many metrics”.
But Transfield repeated yesterday that it is prepared to hold exploratory discussions with Ferrovial to see if a proposal that delivered “better value” to shareholders could be developed (i.e., a higher price).
"Transfield will advise shareholders of the outcome of the discussions with Ferrovial on its proposal as soon as practicable.
“The process may take some time and there can be no certainty that an acceptable proposal will eventuate,” the company said.
Directors want Ferrovial to sign a confidentiality agreement before giving the Spanish group access to its books for limited due diligence.
But the Spanish company has been reluctant to do this, saying that Transfield has asked it not to proceed with any offer that has not been recommended by the Australian company’s board.
Ms Smith-Gander said on Wednesday that Transfield had been asked to sign "a normal confidentiality agreement and standstill”.
Transfield’s biggest institutional investor, Allan Gray, has backed the company’s decision to reject the $1 billion indicative takeover bid, arguing the Australian group is worth more than $2 a share.
The firm’s Simon Marais told Fairfax Media (he is a big shareholder in Fairfax Media as well) “I think [Transfield’s] worth more, “adding he’d be “disappointed” if Ferrovial didn’t come back with a bid of more than $2 a share”.
Transfield says it will release a further update on its outlook at its half-year results early next year.
