Despite ramping up its war of words opposing as "opportunistic" an unwanted takeover offer from Downer EDI, contractor Spotless shares continue to wallow at a discount to the bid as a large shareholder in the target has signalled its opposition to the offer at the present price.
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Spotless on Monday issued a lengthy statement outlining reasons for opposing the $1.15 cash a share takeover received from Downer, telling shareholders to "take no action", as its shares traded down 0.25?? to $1.08.25?? late in the day Monday.
The target has applied to the takeover panel outlining a series of complaints that will at the very least delay the despatch of the bidder's statement to shareholders, which in turn gives Spotless more time to beat the bushes for alternative offers.
Spotless claimed in Monday's statement it has received "expressions of interest" from a number of unidentified parties, which are "dependent on confidentiality being maintained".
Additionally, it disclosed a New York investor, Coltrane Asset Management has a 10.37 per cent shareholding in Spotless "through cash-settled equity swaps and an expectations to be delivered upon request the ordinary shares the subject of those swaps". This could result in Coltrane emerging as the target's second largest shareholder, after Downer which has a 15 per cent stake, it claimed.
Spotless is to provide its response to the unwanted offer within 15 days of Downer sending the bidder's statement to shareholders but with the prospect of a delay as the takeover panel reviews the application received from Spotless, it may take several weeks yet before the document - with the recommendation of Spotless - is in the hands of shareholders.
Since it controls more than 10 per cent of Spotless shares, Coltrane is in a position to block Downer from taking full control of the target and, according to Spotless, Coltrane reckons the offer is pitched too cheaply.
Along with including a 90 per cent minimum condition, the Downer offer has a number of conditions, including no reduction in earnings guidance by Spotless, no material acquisitions, disposals and the like.
"Coltrane has indicated to Spotless that its present intention ... would be to reject the offer at the current offer price," Spotless claimed in the statement issued Monday.
Downer shareholders have been highly critical of the offer, arguing it would destroy shareholder value and this was one reason shares in the company remain under pressure.
Downer raised $1.1 billion from institutional shareholders via a placement at $5.95 late last month, with its shares continuing to trade at a discount to the offer, fetching $5.66, down 13??, in late trading Monday.
