DOWNER EDI Limited (ASX: DOW) says its unconditional takeover of Spotless Group Holdings Limited (ASX: SPO) will close tonight at 7pm, as it announces its stake in Spotless has risen to 64.3 per cent.
Downer is now the controlling shareholder in Spotless, and the group has called on remaining shareholders to accept its offer.
The engineering and infrastructure group warns remaining shareholders of "minority risks" if they do not accept the offer, notably that the Spotless share price is likely to trade at a substantial discount to the offer price once the offer closes.
"The last trading price for Spotless shares prior to the Offer was $0.725 per share. The Offer Price of $1.15 per share represents a 59% premium to that price," says Downer.
"Remaining Spotless shareholders should accept the Offer as soon as possible to realise a certain cash premium for their Spotless shares."
Though the offer technically ends at 7pm tonight (11 July 2017), as the controlling shareholder, Downer can extend the offer again under the Corporations Act.
Despite Downer's current control over Spotless, the cleaning service provider again called on shareholders reject Downer's offer.
Spotless Chairman, Garry Hounsell, says Downer's offer does not reflect the true worth of the company and he announced several new contracts wins for the company worth $250 million.
These include a new catering contract with Taronga Zoo, a short-term extension of essential support services to three metropolitan Adelaide hospitals, a renewal of a security services contract with Port Authority of NSW, and a renewal of a facilities management contract with Myer for an additional five years.
"The contract wins and renewals of over $250 million announced today reflect the continued positive momentum of the business," says Hounsell.
"These recent wins and renewals, along with the improved net debt position are further evidence that the strategy reset put in place under Spotless CEO Martin Sheppard is delivering tangible results for shareholders."
"While shareholders weigh the benefits and risks associated with remaining minority shareholders of Spotless, the Board continues to hold the view that Downer's opportunistic Offer does not represent adequate value," says Hounsell.
"If it doesn't achieve its original objective of gaining outright control and full ownership of Spotless, Downer may well need to make a new, improved offer to convince remaining Spotless shareholders to accept. There, of course, can be no guarantee of such an offer emerging."
"Although there are risks associated with remaining a minority shareholder, these risks are mitigated while Spotless remains listed and there is a large and supportive minority shareholding."
Business News Australia
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