Australia's Cardno backs improved buyout offer from Crescent

The PE firm last month said it would buy one out of every two shares - excluding the 19.62% it already owns - in Cardno at A$3.15 apiece. Having received a cash payout for half their holdings, shareholders can either sell the rest on the market or hold on to them. The board said the offer was opportunistic and undervalued the business.

Crescent is now willing to pay A$3.45 per share - a 38% premium to the September 11 closing price, the last trading day before Crescent's interest was made public. The stock had gained more than 8% to reach A$3.05 by mid-afternoon trading on October 19.

Should the offer be fully taken up, Crescent would pay approximately A$235 million ($171 million) and hold a 58.91% interest in the company. Under the terms of the agreement with Cardno's board, once Crescent crosses the 30% threshold, two of the existing directors would resign and four new ones would be appointed, including three representing the PE firm. There would be seven directors in total.

Cardno focuses on developing physical and social infrastructure projects. It has struggled due to reduced demand for oil and gas services in the US, while the commodities downturn in Australia has prompted a wind-down of major project work and delays in infrastructure investment.

Crescent noted in its bid document that Cardno faces numerous challenges, having seen its share price drop from A$7.56 in July 2012, while there has been negative earnings growth of 21% per annum over the three years to June 2015.

Although revenue grew to A$1.43 billion in 2015 from A$1.31 billion the previous year, Cardno swung from a net profit of A$78.1 million to a net loss of A$145.2 million. EBITDA fell from A$141.7 million in 2014 to A$108.4 million in 2015.

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• Topics
• Buyouts
• Australasia
• Infrastructure
• Infrastructure
• Commodities
• buyout
• Australia
• Crescent Capital Partners