With the Takeovers Panel deciding not to look into Downer EDI’s (DOW) $1.3 billion bid to acquire cleaning and catering group Spotless Group (SPO), it’s all over bar the shouting.
Spotless last month asked the panel to restrain distribution of a bidder’s statement that it claimed contained material defects and misleading statements.
Yesterday the panel declined to conduct proceedings, saying there was no reasonable prospect it would conclude there were unacceptable circumstances in the bid. In other words, Spotless’ rather weak counter attack against the Downer bid failed comprehensively
To reassure Spotless, Downer has agreed to provide additional disclosure in a replacement bidder’s statement, including clarifying the operation of withdrawal rights for accepting Spotless shareholders while the bid is conditional, the panel said in its statement.
Downer is due to send out the takeover offer this week, which will formally start the takeover process. Once the offer is dispatched to shareholders, Spotless will have 15 days to produce its target’s statement.
The panel’s decision comes as Downer prepares to close the retail part of its $1.1 billion equity raising, which will finance the takeover if it is successful.
The issue to big shareholders was a a spectacular failure with a significant shortfall that underwriter UBS has been left holding until the bid is done.
Downer is looking for $258 million from retail shareholders and that is likely to fail as well.
Stockbrokers say there is no incentive for retail shareholders to take up their entitlements because Downer’s shares, which closed on Friday at $5.54, is trading at a steep discount to the offer price of $5.95.
Spotless shares have closed at $1.09, well under the $1.15 a share offer price. Speculators see no chance of a counter offer emerging for Spotless, while many big shareholders remain doubtful about Downer’s rationale for the bid.
