Charter Hall and Abacus Property Group lifted its offer for Australian Unity Office Fund. The offer has been increased from $2.95 per share to $3.04 per share, valuing the property trust at close to $496 million. The consortium says the bid is its best and final offer and subject to due diligence. The price is a 9.4 per cent premium to the office fund’s share price of $2.78 on June 3 before its first bid was received. Australian Unity is still considering the offer and telling shareholders to take no action. It’s office fund that is subject to the takeover owns nine office properties across central city markets. Australian Unity is working with investment bank UBS and law firm Allen’s.
Cimic Group Ltd (CIM):
CIMIC Group subsidiary UGL has extended its maintenance contract with Sydney Trains by three years in an agreement that could pocket the company an extra $353 million in revenue. The new five-year deal, which replaces a two-year extension announced in January, will provide heavy maintenance, component overhaul and engineering and depot-related support for a portion of the city’s metro rail fleet. CIMIC said on Wednesday the new contract will generate approximately $630 million in revenue for UGL, replacing $277 million in revenue. “We are very pleased to be extending our long-standing relationship with Sydney Trains and Transport for NSW, building on a partnership that has spanned several decades,” CIMIC chief executive Michael Wright said.
GBST Holdings Ltd (GBT):
A bidding war for fintech group GBST looks set to be taken out by US suitor SS&C Technologies, as the target today recommended a $3.60 bid from the Nasdaq-listed company. Over the weekend, SS&C lobbed a $3.25 per share cash offer for GBST, usurping ASX rival Bravura, before a third suitor FNZ stepped in with a $3.50 apiece offer from FNZ Group. Today’s $3.60 offer values GBST at roughly $244 million and is at a significant premium to the first bid of $2.50 from Bravura. The board of GBST said it was unanimously recommending the updated SS&C proposal and had entered into an exclusitivy deed for three weeks to complete its due diligence.
Hub24 Ltd (HUB):
Investment platform HUB24 has halted trade on Wednesday morning following claims yesterday’s second consecutive rate cut will trigger accounts to earn net negative cash returns. Research from Macquarie, and reported in the media, suggested the RBA cut to 1 per cent will pressure platform cash spreads.“Given the combination of direct and indirect fees on allocations of cash and our expectation of greater fee transparency post RC, we see little appetite for account holders to earn net negative cash returns, especially when these can be offset by sharing in the platform cash margin, and conclude higher risk on super accounts as we see higher regulatory oversight for the sector,” Macquarie analysts said. They estimated an earnings per share hit of 18 per cent for HUB24 on FY20, along with a 10 per cent hit to rival Netwealth.“We don’t expect HUB24 or Netwealth to be able to offset with repricing options,” Macquarie said.
Nufarm Ltd (NUF):
Nufarm is believed to have drafted investment banks JPMorgan and UBS as defence advisers, with suggestions a US-based private equity firm has approached the Australian-based agricultural chemicals company for talks about a takeover. Nufarm declined to comment yesterday but it is understood a US buyout fund — believed to be a group such as Blackstone or Brookfield — had been weighing a potential buyout of the $1.56 billion company. No formal approaches are understood to have been made. After early talks Nufarm, which had $1.577bn of debt at the start of the year, is understood to have insisted they return when they had an actual proposal. The caution for a buyout fund or any other party interested in the business is that Nufarm sells the herbicide Glyphosate, which a US court found was a cause of cancer. However, the thinking is manufacturers are more likely to face legal action than distributors and it is not thought to be a major deterrent for any buyer.
Silver Chef Ltd (SIV):
Kitchen equipment rental provider Silver Chef is set to be bought out by a private equity consortium led by Next Capital in a $12.5 million deal revealed this morning. The consortium of investors has lobbed a 70c per share bid for the group, a downgrade from an earlier offer of $1 per share in April, but amid a tough backdrop for the company who is fighting to keep its head above water. The company has been operating with the support of its financiers since July 2018, and the board today said it was unanimously backing the proposal. “Today’s announcement represents the culmination of extensive negotiations with Next Capital and the Company’s financiers and takes into account the prospects facing the Company in a constrained funding environment and the urgent need to cure the covenant breaches to ensure the ongoing support of the Company’s financers,” it said in a statement.
Speedcast International Ltd (SDA):
Satellite tech Speedcast was pummelled by investors on Tuesday, falling 40 per cent in trade after cutting its earnings guidance and warning of delays in benefits from its Globecomm acquisition. The stock is again the worst performer on the benchmark today, as analysts trim their outlook on the stock. Analysts at Credit Suisse have listed four reasons the company is of concern, while cutting its target price by 40 per cent to $2.20. 1) Globecomm’s ex-synergy earnings will be down roughly 30 per cent YoY. For a business only 6 months into SDA ownership, the level of churn within the existing book is concernin. 2) Carnival upgrade is taking much longer than expected, with no line of site around technical remediation. 3) Slower VSAT conversion and higher customer churn than expected. 4) Net debt to earnings at the end of the year is expected at 3.8x. This materially drops in CY20 to 2.8x but relies on earnings rebound around which confidence is understandably limited.
Vocus Group Ltd (VOC):
Vocus Group on Wednesday affirmed underlying earnings guidance for the current financial year and said it anticipated earnings in a similar range the year after, remaining upbeat despite a series of failed takeover bids. The Australian fiber and network telecommunications company said it continued to expect underlying earnings before interest, tax, depreciation and amortization of between $350 million and $370 million in fiscal 2019. It said underlying earnings in fiscal 2020 was expected to be in the same range, with growth in its core network services business offset by a similar decline in its retail division. Last month, the company was targeted by energy giant AGL in a $3 billion takeover, what was abandoned just a week later.
Woolworths Group Ltd (WOW):
Woolworths has laid out its plan to separate its drink business Endeavour Drinks as the group merges with ALH Group. The widely-tipped spin-off ties together Woolworth’s Dan Murphy’s franchise with ALH Group pubs and liquor stores, currently 75 per cent owned by Woolworths alongside joint venture partner Bruce Mathieson Group (BMG). The new group, to be referred to as the Endeavour Group, will be Australia’s largest integrated drinks and hospitality business with sales of approximately $10 billion and earnings of $1bn. BMG will swap its interest in ALH for a 14.6 per cent stake in the combined group. “The separation will allow Woolworths Group to benefit from a simplified organisational structure, a greater focus on its core food and everyday needs markets and opportunities to continue to build out the Woolworths Group retail ecosystem,” Woolworths said in a statement to the market.“Separation will also allow Endeavour Group to realise its full potential through business simplification and efficiencies with greater access to capital to pursue investment and growth, while retaining the benefits from a strong partnership with Woolworths Group.”
(Source: AIMS)
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