The Spotless Group Holdings Ltd (ASX: SPO) share price surged 5.3% yesterday ahead of the company’s ASX delisting on 27 August.
Why is Spotless applying for ASX delisting?
With no new announcements from the Aussie facilities services group, the share price move appears to be general volatility ahead of the company’s pending ASX delisting.
On 25 June 2019, Spotless made a formal application for removal of the company from the ASX Official List, a resolution which was subsequently passed by the company’s shareholders.
Some of the reasons cited by Spotless for delisting include:
According to Spotless, continuing listing requires the company to incur considerable corporate and administrative expenses, including listing fees.
Spotless said that it is seeking to minimise expenses and getting removed from the official list of ASX would help in eliminating such costs.
The Board of Spotless has determined that the costs of remaining listed on the ASX outweigh any benefits of listing for the company and this was a big factor in the delisting application.
Liquidity and ownership
Trading in the ordinary shares of Spotless has had a low level of liquidity over a significant period on the ASX, which has led to low trading volumes and an erratic share price.
Two shareholders in Spotless collectively hold 99.44% of the ordinary shares in Spotless (Shares), with Downer EDI Ltd (ASX: DOW) owning 88% of Spotless in its own right.
How has the Spotless share price performed in 2019?
Following yesterday’s share price surge, the Spotless share price is valued at $1.65 per share, just shy of its $1.70 per share valuation at the start of January.
Management appears to be absolutely spot on with its volatility share price assessment, with the Spotless share price having hit a 52-week high of $1.82 per share in April and fallen to as low as $1.40 per share since the start of the year.
The company currently boasts a market cap of $1.82 billion but remains thinly-traded given Downer’s 88% majority stake and minimal free float.
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Motley Fool contributor Kenneth Hall 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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