The board of contractor Broadspectrum has hinted that it will likely recommend against a $715 million takeover bid from Spanish giant Ferrovial, even as its share price continues to slide.
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Broadspectrum’s shares have halved over the past year after it come under scrutiny for its management of the detention centres on Nauru and Manus Island, which some lawyers have claimed are operated in breach of global human rights law.
Madrid-listed Ferrovial had offered Aus$2.0 a share in October a year ago, valuing Broadspectrum, then known as Transfield Services, at around Aus$1.0 billion (US$733 million), but it was rejected as poor value.
Its board noted the company had delivered on “significant milestones” in the past year including maintaining $10 billion of work in hand, securing preferred positions on $2 billion worth of new contracts, delivering on upgraded 2015 earnings guidance, strengthening the balance sheet and reiterating 2016 full-year guidance at its October AGM.
The Broadspectrum Ltd (ASX: BRS) share price leaped nearly 50% on news of another takeover offer from Spanish multinational infrastructure business, Ferrovial.
In an announcement to the ASX, Broadspectrum told its shareholders to take no action.
It also pointed out that its shares had traded above $1.60 as recently as June and that Ferrovial has not had access to “confidential company information” since December 2014.
Ferrovial’s offer is a 59 percent premium on Broadspectrum’s last closing price of 85 Australian cents (62 USA cents) per share on Friday.
“This deal provides (Ferrovial) with a platform for growth into Australia at a 30 percent discount to their first offer that was knocked back… and no potential shareholder backlash domestically”, said Matthew Felsman, a private wealth adviser at APP Securities Pty Ltd.
The Australian firm said on Tuesday it will make a formal recommendation to shareholders in January on whether they should accept the $1.35 per share all-cash offer.
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The company operates in several sectors including infrastructure, property, defence and financial services.
