Speculation of takeover bid for Spotless after its share price plunge

After nearly half of Spotless' value was wiped out following the recent profit warning, it has been mooted that the company has 'attracted takeover interest.'

Spotless reportDespite Spotless Group’s boss Martin Sheppard stating two weeks ago that the contractor will refresh its strategy after nearly half the company’s value was wiped out following the recent profit warning, it has been reported that the facilities management company has ‘attracted takeover interest’, states the The Australian on 8 January.

Mr Sheppard attempted to soothe investor nerves after the $1 billion stock rout, sparked by a shock 10 percent forecast fall in profit year-on-year due to lagging efficiencies in its laundry division takeovers, along with a missed Rio Tinto contract worth $50 million a year in revenue.

However, unsourced reports said a ‘potential off-shore acquirer had showed interest in the former private equity spin-out and named international competitors Sodexho of France, London-listed Compass Group, Aramak of the US and Denmark’s ISS at potential suitors,’ stated the article.

It is not confirmed, however, that Spotless has received any approaches after the company declined to comment.

The appeal of Australian companies to offshore suitors has also been boosted by a fall in the AUD dollar that makes local companies 25 percent cheaper in US dollar terms than they were 18 months ago.

Spotless’ shares are down about 60 percent from their peak of $2.47 in April 2015 and fell 40 percent on 2 December after the company changed its profit guidance. It did not live up to chairman Margaret Jackson’s announcement at the annual meeting in October that the company expected its 2016 results to “materially exceed” those for the previous year.

The company also recently lost a 30-year-old contract at Suncorp Stadium to O’Brien Group Australia (see our coverage here).

The service provider, best known for managing facilities and providing catering at the MCG, is otherwise regarded as having ‘secure, long-term contracts that provide predictable revenue and earnings’, reported The Australian.


Spotless re-signs Housing New South Wales contract

As we went to press on 15 January Spotless announced it had been awarded a five-year contract to deliver Asset Services Maintenance for the New South Wales Land and Housing Corporation (LAHC).  ‘This contract extends for an additional five years and builds on Spotless’ long term partnership with LAHC since 2002. The annualised total revenue from the contract is over $62m. Under the contract Spotless maintains over 24,000 properties, including maintenance, capital works and restoration/ heritage works,’ said the company statement.

www.theaustralian.com.au, www.spotless.com



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