Broadspectrum Rejects Ferrovial's Final $580 Million Bid

  • Sweetened bid of A$1.50 a share is `best and final' offer
  • Australia's Broadspectrum rejected A$1.35-a-share proposal

Broadspectrum Ltd. rejected a final, sweetened offer of A$769 million ($580 million) from Spain’s Ferrovial SA after the two company’s boards failed to agree on price.

Ferrovial on Wednesday raised its bid for the Australian services provider by 11 percent to A$1.50 a share in cash. That’s the “best and final” offer -- unless beaten by a rival, the Madrid-based company said in a statement. Broadspectrum had rejected a A$1.35-a-share proposal from Ferrovial in January.

The latest bid “still does not reflect the true value” of Broadspectrum, Chairman Diane Smith-Gander said in a separate statement. The board “remains open to considering any offer from any party that maximizes shareholder value.”

The rejection comes almost 18 months after Broadspectrum, then known as Transfield Services Ltd., rejected a A$2-a-share offer from Ferrovial. This year, Broadspectrum’s own independent expert valued the company’s shares at between A$1.60 and A$1.85 apiece.

Shares of Broadspectrum advanced 2.4 percent to A$1.28 at the close in Sydney after the rejection. The stock climbed 7.8 percent Tuesday before Ferrovial’s sweetened bid was unveiled.

‘Significantly’ Undervalued

Broadspectrum’s biggest shareholder, Allan Gray Australia Pty, said the sweetened offer “significantly undervalues” the company. The fund manager made it “very clear” to Ferrovial what price was required, Chief Investment Officer Simon Mawhinney said by phone from Sydney.

“We understand you have to leave some money on the table, but you do not have to give the company away either,” Mawhinney said. An offer near the mid-point of the independent expert’s range would have been acceptable, he said.

Broadspectrum’s underlying earnings before interest, taxes, depreciation and amortization in the year ending June 2017 should be more than A$300 million, it said in its statement. That’s higher than the A$280 million to A$300 million that the company expects this fiscal year.

Ferrovial had said its A$1.50-a-share offer would close on May 2 and was conditional on a 50.01 percent minimum acceptance level.

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