Shares in manufacturer Bradken have soared to a two month high as the company’s board mulls an $872 million takeover offer from a private equity consortium.
Pacific Equity Partners and Bain Capital Asia have put forward a non-binding, indicative proposal to acquire all shares in the cast iron and steel supplier for $5.10 each, well above the $3.32 Bradken shares were worth on Thursday.
Bradken’s board, chaired by former NSW premier Nick Greiner, is considering the offer and says there is no guarantee of a transaction going ahead.
But news of the proposal boosted Bradken shares, gaining $1.21, or 36 per cent, to $4.53, their highest level since mid-September.
The consortium’s offer is conditional on due diligence and support from the board.
It put forward a larger takeover proposal to Bradken in August, worth $1.03 billion, but that did not proceed to a formal offer.
Bradken on Friday said the $872 million proposal had come during a low point in the mining cycle, and at a time of significant share price volatility for the mining services sector.
“In this context, the board has determined that it is important for shareholders to be aware of the proposal,” it said.
Bradken also said it remains confident of its growth prospects, and believed it was well placed to continue to grow and maintain earnings.
The company has several initiatives underway to “recharge growth” in its business, including a reduction of overheads and the purchase of a foundry in India to be used for low-cost manufacturing, it said.
Bradken cut about 500 jobs in a major restructure in the 2013/14 year, as its profit dropped 68 per cent amid lower revenue from its mining products, mineral processing, rail and engineering divisions.
The company said it was also considering other opportunities outside of the takeover proposal that would further strengthen its position in key markets.