What: At 7:31 pm on Thursday night, the Board of takeover target Broadspectrum Ltd (ASX: BRS) released an announcement to the ASX stating that the directors of the company had changed their recommendation regarding a takeover offer for the group.
Here's the opening sentence from the statement:
"Broadspectrum Board changes recommendation: now recommends shareholders ACCEPT Ferrovial's Revised Offer of $1.50 cash per share in light of increased uncertainty related to operations in Manus Province."
So What: The decision by Broadspectrum's Board is an abrupt about-face with the board noting that the "change in recommendation is as a result of increased uncertainty related to the Company's operations in Manus Province."
Investors who have followed events closely will be aware that earlier this week the Prime Minister of Papua New Guinea (PNG) announced that the Regional Processing Centre (which is located on Manus Island) would be closed down.
The announcement by the PNG government has obviously created uncertainty as to the earnings outlook for Broadspectrum; it would also appear to highlight the significance of the Manus Island contract to the overall group.
Now What: Due to the timing of events, shareholders who have not yet accepted Ferrovial's takeover offer are left with very little time to act.
The Offer Period is scheduled to close on 2 May 2016 which gives shareholders very little time to accept should they wish to do so!
Ferrovial formally announced its original offer of $1.35 a share on 2 December 2015. This offer was rejected by the Board on 20 January 2016.
Then on 6 April 2016 Ferrovial increased and made final an offer of $1.50 per share; Broadspectrum's Board released a statement the same day rejecting the Revised Offer.
According to documents filed with the ASX on 28 April 2016 Ferrovial has an interest of approximately 14% of the shares outstanding in Broadspectrum.
Considering that the process has been ongoing for months, it's a disappointing and unusual situation that shareholders are now being advised to meet a very tight deadline.
No doubt a couple of busy days of paper work lie ahead for all involved.
