Industrial services company Spotless Group Ltd. has bowed to shareholder pressure and agreed to sell 100 percent of its shares to Pacific Equity Partners Pty. Ltd. (PEP).
The sale price of A$2.71 a share is 9 cents below Spotless' original asking price. The offer values Melbourne-based Spotless, whose polypropylene coat hanger division is the company's weakest link, at about US$725 million.
Spotless spokesman Tim Duncan said the sale process started in May 2011, when New York-based global private equity firm Blackstone Group LP offered to buy Spotless for A$2.50 a share. Blackstone's offer was rejected, but its advisers found PEP as an alternative buyer.
“There was a link between the two offers,” Duncan said.
In November, Sydney-based PEP, a private equity firm focused on buyouts and providing late-stage expansion capital in Australia and New Zealand, offered to buy Spotless shares for A$2.63 each.
The Spotless board rejected the proposal, saying it did not reflect the company's “fundamental value.”
Spotless told the Australian Stock Exchange (ASX) on Jan. 9 that PEP had to increase its offer to at least A$2.80 a share if it wanted access to its books under a due diligence agreement. But Spotless later agreed to show its books to PEP, and the two sides settled on the A$2.71 per-share price April 30.
The deal is subject to shareholder, court and regulatory approvals, and is scheduled to close in mid-August.
The Australian media has speculated the Braiform division was the cause of the stalled talks between the companies. Braiform supplies PP coat hangers, packaging and hanger re-use programs to customers in 32 countries, including the United States.
Spotless public affairs manager Kerrina Lawrence said Braiform CEO Peter Solomon resigned March 29 “to focus on his private business activities.” Former Braiform CEO Nick Ente is acting in the position until a permanent replacement is found.
Spotless Chairman Peter Smedley told the ASX the scheme was “in the best interests of shareholders” because it gives the most certain near-term return. Also, the majority of shareholders made it clear they support a price at or above A$2.68 a share.
Rob Koczkar, PEP managing director, told Plastics News: “We are pleased to put forward what we believe is an excellent offer for shareholders. It provides certainty of cash at a compelling price.”