By Ian McIlwraith
Spotless chairman Peter Smedley and his board might have rolled over to Pacific Equity Partners' marginally revised $720 million takeover offer this morning - but he sure ain't happy about it.
Smedley today drew a distinction between fundamental value, which Spotless's board has previously indicated to be around $2.80 a share, and the relative value of an offer on the table right now, which is worth anywhere between $2.62 and $2.726 - depending on how harsh you want to be about judging whether dividends can be legitimately included in the value of an offer, and the value of franking credits.
Spotless's acceptance of the offer seems to be more a product of not being able to get any bidding tension - no obvious rival emerged - and the war of attrition on management and staff time/fear and, most importantly, customer loyalty given that Spotless has effectively been under a takeover cloud since last May.
In a curious way, the very presence of a takeover offer capped the value of Spotless because of the cost of dealing with it.
As Smedley described the due diligence process this morning: "It's like 400 of your in-laws in the bedroom when you are trying to put the baby to bed" - which gives and insight not only to the process, but Smedley's family experiences.
Insider would also suggest that Investec’s Christian Nicks and Citigroup’s mergers and acquisitions team, AKA ‘‘the jockeys’’ in Smedley’s parlance, cross off their chances of getting any work from a company where the Spotless chair has influence.
Investec and Citigroup are not only advising PEP on Spotless. They also worked with Blackstone a year ago in the first crack at the catering, cleaning and maintenance services group - hence his quip about them having been the jockeys that started the takeover race, switching horses when they failed to get past the post the first time around.