At the time of writing, the Downer EDI Limited (ASX: DOW) share price was up 1.44% to $4.22 as the company released its annual report and launched a takeover bid for Spotless.
What are the details of the takeover bid?
Downer intends to acquire the 12% of Spotless that it does not already own to take its ownership to 100%. As part of the deal, Spotless shareholders other than Downer will be entitled to receive $1.00 in cash for each of their Spotless shares. In addition, for every 17.93 Spotless shares, shareholders will receive one Downer share option with an exercise price of zero. This will allow Spotless shareholders to gain exposure to the Downer share price after the takeover.
Spotless delisted from the ASX in 2019.
Currently, Downer owns an option giving it the right to purchase another 2.99% of Spotless shares. This will take its ownership above 90%, allowing Downer to make a compulsory takeover if shareholders do not accept its current offer.
What were Downer’s annual results?
Downer EDI had revenue of $12.7 billion in the 2020 financial year, this was down 0.5% on the 2019 financial year. Earnings before interest and tax (EBIT) were -$41.3 million in the 2020 financial year versus $462.2 million in the 2019 financial year.
The company posted a net loss after tax of $150.3 million in the 2020 financial year. This compared to a net profit after tax in the 2019 financial year of $261.8 million. Earnings per share were -26.6 cents in the 2020 financial year.
Downer EDI had impairments on non-current assets of $212 million in the 2020 financial year versus zero in the 2019 financial year. The company had depreciation on leased assets of $151.8 million in the 2020 financial year, this figure was zero in the 2019 financial year.
The company reported that earnings before interest and tax and before amortisation (EBITA) of acquired intangible assets was $30 million.
About the Downer share price
Downer EDI is a services company that operates in Australia and New Zealand. It operates services including road, rail, power, gas, water, health, education, defence, and government services. Downer EDI is listed on the ASX along with the New Zealand Stock Exchange.
Earlier this year, Downer raised $400 million from shareholders through an entitlement offer at a price of $3.75 per share. The capital raising was intended to support Downer in making a full takeover of Spotless.
The Downer share price is up more than 66% from its 52 week low of $2.54, however, it is down 46.5% since the beginning of the year. The Downer share price is down 41.8% since this time last year.
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Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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