The shares of both Perenti Global Ltd (ASX: PRN) and Downer EDI Limited (ASX: DOW) will be on watch on Monday.
This follows the release of an update on Perenti's potential purchase of Downer EDI's mining services business.
What did Perenti announce?
This morning Perenti announced that it has suspended its participation in the sale process conducted by Downer EDI for its mining services division. The company made the move due to current market conditions.
It originally stated that it would only put forward an offer to acquire the business if it were to align with its strategy and deliver value for shareholders.
And whilst management believes the potential acquisition has strategic merit, it considers that structuring and funding a transaction in the current period of market uncertainty and volatility would not be in the best interests of shareholders.
The company's managing director, Mark Norwell, explained: "We will maintain a watching brief on the situation and do not rule out re-engaging with Downer if market conditions improve. It is important we maintain discipline around our growth strategy. Creating value for our shareholders is always at the forefront of our thinking and will continue to be as we execute against the initiatives detailed in our 2025 Group strategy."
Downer EDI response.
Downer EDI appears to agree that now is not the time to be conducting deals of this nature.
This morning it revealed that it has suspended its review of the mining services business due to the market volatility caused by the COVID-19 pandemic.
Downer EDI's CEO, Grant Fenn, doesn't appear concerned by this and seems confident a buyer will be found in the future if the company decides to part with it.
He said: "As we said when we announced the portfolio review, Downer's Mining business is a leader in Australia with a proven track record and it is well positioned to build on its strong market position and pipeline of work."
