Spice rejects Cinven again
UTILITIES services company Spice will talk with its largest shareholders today after knocking back an improved takeover offer from Cinven, the private equity house.
The FTSE 250 firm rejected a second approach of between 62p and 65p per share, worth up to £230m, as it revealed full-year results in line with expectations yesterday. Spice delivered a flat pre-tax profit of £31.5m on an 11 per cent rise in revenues to £310.7m. Pro-forma net debt was down to £91m or 2.2 times underlying earnings. The market reacted positively. Shares in Spice closed 6.5 per cent higher at 57.5p.
Geoff Allum, an analyst at Arden Partners, described Cinven’s sweetened offer as “ridiculous”. He said: “I don’t know what they’re playing at. This company’s in one of the best markets around at the moment, and to be offering a price at this range is not going to bother either the board or the investors.”
Chief executive Martin Towers told City A.M. the conditional approach came “with a lot of assumptions and preconditions attached to it”, adding: “We feel that undervalues Spice.”
Announcing his first performance figures since taking over from founder Simon Rigby in February, Towers indicated Spice’s facilities unit could be sold in a bid to further reduce the company’s debt. It has been under review following the disposals of Spice’s telecoms and loss-making gas businesses, and could fetch up to £10m. Towers described the overhaul as “part of the process of rebuilding credibility for Spice”.
Finance director Oliver Lightowlers said the outfit’s profits would increasingly be fed into bringing borrowing below two times underlying earnings.