Redflex confident of improved $2.50 takeover bid

We’re sorry, this feature is currently unavailable. We’re working to restore it. Please try again later.

Advertisement

This was published 13 years ago

Redflex confident of improved $2.50 takeover bid

By Ian McIlwraith

INVESTORS in traffic camera operator Redflex Holdings are likely to find out in a few weeks whether Santa will be naughty or nice this Christmas, and drop a $300 million takeover offer down their chimney.

Redflex and its advisers, Greenhill Caliburn, revealed yesterday that they have managed to turn Macquarie Group's $2.50 a share ''indicative, non-binding and confidential'' proposal, which surfaced in June, into an unspecified short list of ''credible parties''.

The plan is to offer the finalists - understood to include Macquarie - further access to Redflex's books and the chance to come up with an acceptable offer by December.

Investors have not, however, been given any hint of how many parties are on the shortlist, the timetable for discussions, or whether the potential buyers are from overseas, let alone whether a bid would come in at much more than Macquarie's $2.50 proposal.

Redflex's reticence on detail is designed to maintain competitive tension in the bidding process - so interested parties have no idea who or how many rivals they have.

Valuing the company has been made more difficult in recent months thanks to the waning US dollar - 60 per cent of the company's business is located there, but the profits now generate significantly fewer Australian dollars when translated.

Two years ago the Redflex board announced that it had received multiple proposals, also of the indicative and non-binding kind, to buy the company out for more than $3.50 a share. Back then, the company's annual sales were $88 million a year and gross assets $128 million, compared with sales of $137 million and assets of $231 million in 2010.

By May 2009, the proposals to take over Redflex had either evaporated or been dismissed. A few months later, major shareholders tried to dismiss three out of four non-executive directors, eventually settling for the trio's replacement at the end of the annual meeting.

The new board, under chairman Max Findlay, has since been trying to clean up Redflex's operations and balance sheet. That cost the company in profit terms this year, as it had to provide for legal bills and contract problems in the US.

A $3.50 offer in 2008 would have valued the company at $315 million, while a $2.50 offer puts a $275 million worth on Redflex. The shares closed 20¢ up at $2.55 yesterday.

Most Viewed in Business

Loading