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Spotless suspends shares ahead of news on PEP buyout bid

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Spotless Group has suspended trading of its shares ahead of an announcement regarding Pacific Equity Partners’ (PEP) buyout offer for the cleaning services company. The private equity firm has reportedly improved its bid to A$745 million ($766.7 million) from A$711 million.

Citing sources familiar with the deal, Reuters said that the first offer of A$2.68 per share in cash is unchanged, but PEP has put forward a second proposal that includes the promise of additional cash return following the divestment of non-core assets. This would take the value to A$2.80 per share.

Spotless said on Monday that PEP had finished examining its books and had secured financing for a deal, but negotiations were still underway. The divestment under the second proposal would likely see the sale of underperforming coat hanger business Braiform.

Spotless allowed PEP to conduct due diligence in February, despite saying that it would not entertain any offers below A$2.80 per share. The private equity's firm bid of A$2.68 values the company at 16.5x projected EBITDA for 2012.

PEP originally tabled an offer of A$700 million, or A$2.63 per share, in November, but this was rejected. Earlier in 2011, Blackstone Group's A$657 million offer was also turned down.

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