Spotless Group’s rejection of an indicative $698 million takeover proposal from Pacific Equity Partners has drawn an angry response from major shareholders, who have threatened to spill the company’s board, reported Richard Gluyas in today’s The Australian business pages
Ahead of today’s annual meeting, 8.9 percent shareholder Orbis Investment Management and 3.1 percent holder Investors Mutual criticised the Spotless board for refusing to engage with PEP.
“I think the board is being completely crazy and unreasonable,” Orbis managing director and portfolio manager Simon Marais is quoted as saying.
“Open the books, get the best bid and then let (shareholders) decide if it’s a fair price or not.”
Orbis, Marais said, had already voted in favour of the re-election of non-executive directors Alan Beanland and Bronwyn Morris, but had now changed its position.
If it were not possible to switch its vote, and the board persisted in refusing to engage with PEP, Orbis would “definitely” support any move to call another shareholder meeting to spill the board.
“We don’t think these people are right for the company any more,” Marais said.
According to The Australian report, Investors Mutual portfolio manager Simon Conn backed Marais, saying the final outcome of PEP’s proposal would be “decided by shareholders and not the board”.
Spotless said it had received an indicative, non-binding and conditional takeover proposal from PEP on Wednesday at $2.63 a share.
In a letter to chairman Peter Smedley, PEP said it had struck pre-bid agreements with shareholders controlling more than 26 percent of Spotless that would enable the firm to acquire a 19.6 percent holding should it proceed with a scheme of arrangement or takeover.
The shareholders include Orbis, Investors Mutual, Lazard Asset Management (which has a 9.1 percent stake), former Spotless boss Brian Blythe (4.6 percent) and the founding McMullin family (0.6 percent).
PEP said all the shareholders it had spoken to over the two previous days had said the Spotless board should allow the necessary due diligence to proceed to facilitate a transaction.
A Spotless statement said the board had decided the proposal did not reflect the fundamental value of the company for a change of control.