Broadspectrum, previously known as Transfield Services, has rejected Ferrovial’s A$715 million (€458 million; $497 million) takeover bid as it believes the offer “significantly undervalues” the business.
“Your Broadspectrum shares are worth a lot more than Ferrovial is offering,” Broadspectrum’s chairman Diane Smith-Gander said in a letter to Shareholders.
The Spanish developer offered at A$1.35 per share in its second attempt to acquire the infrastructure services firm. Ernst & Young (EY), which was hired by Broadspectrum as independent expert, said the value of Broadspectrum should be in the range of A$1.71 to A$1.98 per share.
In other words, the Ferrovial offer represents a 27 percent discount to the mid-point of EY's valuation range.
The Australian group also said the offer is “opportunistic” and “highly conditional”, and that the company is in a stronger position now than in December 2014, when Ferrovial indicated a willingness to pay A$2 per share. Broadspectrum, named Transfield at the time, rejected the offer.
The Spanish group is expected to review Broadspectrum’s target statement and respond shortly as its current offer is scheduled to close on 8 February.
Broadspectrum chief executive Graeme Hunt told local press sources that the company remained open to “constructive approaches” from Ferrovial or other suitors.
With more than 25,000 employees, Broadspectrum operates in countries including Australia, the US, Canada and Chile. It is active across the mining, telecommunications and infrastructure maintenance sectors and runs Australia's offshore detention centres for asylum seekers.