Now for the battle for Spotless and who will crack first.
Downer EDI has ended up with 87.8% of Spotless and closed its $1.2 billion takeover offer yesterday, locking in a small group of shareholders, led by New York based-hedge fund Coltrane which has a 10.6% stake in Spotless.
Now Downer will sit and wait and see how long it takes for Coltrane to sue for peace.
Coltrane has rejected the $1.15 a share offer, thereby preventing Downer from achieving the 90% level where it can compulsorily acquire the rest of the shares and delist the company (saving an estimated $1 million in fees).
Downer shares though rose 2% to $7.01 in what was a pretty negative day of trading. That was in fact their highest level since the Spotless bid and $1.1 billion cash issue was announced in March.
Watching this battle of wills will no doubt be more interesting than the performance of Downer EDI which seems to be a bit static at the moment.
There is likely to be some extra activity when Downer completes a review of its businesses and Spotless – that is likely to result in some losses as asset values are reset.
News of the closure of the long running bid (since March), came as Downer finally released its 2016-17 results (two weeks late) which were flat at $181.5 million.
The company said it expected net profit for 2017-18 to rise 5% to around $190 million.
Downer said it would provide updated guidance for the entire Downer group, including Spotless, after it completes a review.
Earnings before interest and taxation (EBIT) rose in all of Downer’s business divisions apart from mining, where EBIT fell 36% to $83.4 million maintaining its recent trend as Downer’s black hole.
Transport (trains) is now the biggest contributor to earnings, with EBIT up 20% to $124.6 million.
Group revenues rose 6.4% to $7.29 billion. Downer will pay an unchanged final dividend of 12 cents a share, making a total for 2016-17 of 24 cents a share steady from 2015-15.
Spotless last Thursday said it incurred a bottomline loss of $348 million for 2016-17 after big one-off costs of $464 million from restructuring, asset write-downs and impairments along with the extra costs of defending the $1.2 billion takeover, produced the slash of red ink. Revenues fell 5.3% at $3.01 billion.
