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Spotless brushes off Pacific Equity Partners

by Laura Board | Published November 17, 2011 at 11:55 AM

Australian support services company Spotless Group Ltd. said Thursday, Nov. 17, it received and rejected a A$698.1 million ($703.7 million) bid from Pacific Equity Partners, which has arranged side deals with certain investors to buy 19.6% of its target.

The A$2.63 per share proposal is the second spurned bid for the Melbourne, Australia, company in six months after Blackstone Group LP offered A$2.50 per share in May.

The investors willing to sell their Spotless shares to Pacific Equity include Lazard Asset Management Pacific Co., Orbis Investment Management (Australia) Pty Ltd., Investors Mutual Ltd. and former Spotless CEO Brian Stuart Blythe and affiliated entities, according to a filing by the buyout firm. Orbis and Investors Mutual executives criticized the Spotless board's stance in interviews with The Australian, suggesting Friday's annual shareholders' meeting could prove stormy.

Under the pre-bid agreements, the investors would sell for A$2.63, or a price that matches any third-party bid. The deals are dependent on Pacific Equity Partners or a third-party proceeding with a takeover for the whole company, something that the buyout firm has not committed itself to do.

Spotless said its directors don't intend to take further action in relation to the proposal.

"The Spotless directors have reviewed the proposal in detail and believe that it does not reflect the fundamental value of the company in the context of a change of control," it said.

The proposed price is conditional on Spotless withholding a first-half dividend, Spotless noted.

Spotless' fiscal 2011 revenue rose more than 11% to A$2.65 billion and Ebit increased 5.3% to A$90.1 million. It had net debt of A$282.7 million on June 30.

Spotless' activities include catering, cleaning, running commercial laundries and call centers, supplying maintenance services to shopping malls and providing garment hangers and packaging services to retailers.

In its last financial year Spotless derived 95% of earnings from Australia and New Zealand, though it also operates in the U.S. and Europe.

The group's shares Thursday closed up A$0.04 at A$2.39.

Spotless, which is led by managing director and CEO Josef Farnik, is being advised by Goldman Sachs Group Inc. and law firm Clayton Utz.

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Spotless brushes off Pacific Equity Partners

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