Broadspectrum Recommends Accepting Ferrovial Bid, Changing Tack

  • Company says certainty of offer may now be attractive
  • Change of stance follows decision to close refugee facility

Broadspectrum Ltd.’s board recommended shareholders accept a A$769 million ($585 million) bid by Spain’s Ferrovial SA for the Australian defense and maintenance-services provider, changing tack from previous guidance to reject it.

Ferrovial earlier this month upped its offer for Broadspectrum to A$1.50 a share in cash from A$1.35, saying that was its final offer. Broadspectrum said the opportunity for shareholders to “receive the certainty” of Ferrovial’s offer may now be attractive.

The change of stance follows a decision by Papua New Guinea to close a Manus Island refugee processing facility in a step that the company said would increase uncertainty over its future earnings. The developments raise questions that can’t be resolved by the time Ferrovial’s bid expires on May 2 and therefore the board urges recommendation of it, Broadspectrum said in an ASX filing.

While Broadspectrum still expects underlying full-year Ebitda to be more than A$300 million, “there is sufficient doubt that it would not be prudent” to maintain the guidance, the company said.

Broadspectrum’s biggest investor Allan Gray Australia Pty will now accept Ferrovial’s offer, Chief Investment Officer Simon Mawhinney said by e-mail. Allan Gray owns 17 percent of the company, according to data compiled by Bloomberg. Ferrovial said in an ASX filing Thursday that it has acceptances from 23.74 percent of Broadspectrum shareholders, up from 16.14 percent on Wednesday.

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