Alan Gray very switched-on investors although nobody can replace their brilliant former CEO who had a doctorate in physics from Cambridge. Even so his legacy remains and hopefully current boss has learnt the ropes. AG (see below) have rejected the new $1.50 TO offer as 'too low' and maintain faith earnings in FY17 will continue to rise at the rate BRS have indicated.
From today's Oz:
Broadspectrum investor Allan Gray rejects Ferrovial bid
Allan Gray managing director Simon Mawhinney says the offer significantly undervalues Broadspectrum. Picture: David Geraghty
Allan Gray managing director Simon Mawhinney says the offer significantly undervalues Broadspectrum. Picture: David Geraghty
Ferrovial has failed to sway Broadspectrum’s largest shareholder despite putting an additional $80 million on the table, valuing the firm previously known as Transfield Services at $794m.
Investment fund Allan Gray said it would not back the last offer, which Ferrovial described as its best and final offer, in the absence of a superior proposal.
Despite the increase in the price, from an earlier bid of $1.35 a share, Broadspectrum’s board urged shareholders to reject the offer.
Allan Gray managing director Simon Mawhinney said the $1.50-a-share offer lobbed yesterday still “significantly undervalued” Broadspectrum.
“We feel that we’d be far better off holding the shares for a number of years and crystallising more value at a later point,” Mr Mawhinney told
The Australian.
“I’m not at all surprised the board has not recommended this offer. I think it’s important to consider their stance; they are the ones who are at the coalface and best understand the mechanics of the business and its prospects.”
The failure to secure Mr Mawhinney’s backing and his 18.7 per cent holding is a significant roadblock for Ferrovial, which had in late 2014 lobbed a $2-a-share bid.
Broadspectrum’s independent expert, Ernst & Young, has suggested the company’s shares are worth between $1.60 and $1.85.
Broadspectrum chairwoman Diane Smith-Gander confirmed that negotiations between the company and Ferrovial had not yielded an agreement.
“The board has actively engaged with Ferrovial in an effort to reach an agreement on value and ensure the best possible outcome for shareholders,” she said.
“The board will continue to work in the best interests of shareholders, and remains open to considering any offer from any party that maximises shareholder value.”
Broadspectrum, advised by Macquarie, has posted a string of contract wins since Ferrovial lobbed its bid in December, including work with AGL and the NSW government.
However, its lucrative contract with the federal government for the operation of the Nauru and Manus Island detention facilities is in doubt, after the company failed to secure a five-year extension but was granted an additional year under the current deal.
Ferrovial has exploited this uncertainty, arguing Broadspectrum shareholders should accept its offer given the certainty of the all-cash bid.
In a statement yesterday, Ferrovial chief executive Santiago Olivares said: “We encourage all shareholders to accept this cash offer at a premium value rather than risk their shares returning to pre-takeover price levels.”
Broadspectrum shares were trading around 90c immediately before Broadspectrum made its $1.35 a share takeover offer, with the Spanish firm consistently warning shares would fall back to that level if it withdrew, given the uncertainty around the detention contract.
Mr Mawhinney yesterday said he was comfortable with the company’s position.
“Incumbency is a good starting position for these contracts. Every single one that comes up for renewal is at risk of being lost. It’s not an extraordinary event, this contract renewal,” he said.
Broadspectrum shares rose 1.2 per cent yesterday.
Ferrovial has already secured approvals from FIRB and New Zealand’s Overseas Investment Office, but the bid is conditional on it securing at least 50.01 per cent of Broadspectrum’s shares.
http://www.theaustralian.com.au/bus...d/news-story/008eb67d23519b9b5ff65cb88728e0d5
