Ferrovial Bids for Australian Operator of Asylum-Seeker Camps
December 07 2015 - 1:30AM
Dow Jones News
SYDNEY, Australia—Spanish infrastructure-group Ferrovial SA
wants to go where many investors have feared to tread—managing
Australia's controversial detention centers for asylum seekers
arriving here by boat.
The company on Monday made an offer of 692 million Australian
dollars (US$508 million) for Broadspectrum Ltd., which manages the
government-owned centers on nearby Pacific islands.
In a sign of its hunger to get the deal done quickly,
Ferrovial's bid doesn't require support from Broadspectrum's
independent directors.
The asylum centers in question have been under scrutiny for
several years amid allegations of abuse and sexual misconduct by
staff toward detainees.
In early 2014, Reza Berati, a 23-year-old Iranian asylum seeker,
was killed in rioting at one of the centers.
As a result, Broadspectrum has become the subject of an
aggressive divestment campaign. Concern over the way the detention
centers are run has prompted some institutional investors,
including industry-pension-funds Hesta and NGS Super, to sell their
stakes recently.
Broadspectrum's shares jumped as much as 54% on Monday when
Ferrovial lobbed the A$1.35-a-share bid, which comes amid
heightened interest from foreign investors in Australian
infrastructure assets from ports and railways to power grids.
"If the offer is successful, it would represent a solid step in
Ferrovial's strategy to expand its global footprint and the group's
presence in Australia," said Í ñ igo Meirá s, Ferrovial's Chief
Executive Officer.
Ferrovial is one of the largest global infrastructure operators,
with assets including London's Heathrow Airport and the 407 ETR
toll road in Toronto, Canada. In Australia, it provides services
such as maintenance and facility management to sectors including
mining, transport and government.
It is the Spanish group's second swipe at Broadspectrum, which
also builds telecoms infrastructure and does maintenance work for
mining companies. Late last year, Ferrovial approached
Broadspectrum with a much higher A$1.95 offer that it later raised
to A$2.00, valuing the Australian company at more than A$1 billion.
The board rebuffed the offer at the time, saying it was too
low.
Broadspectrum's shares, which went on to lose almost a quarter
of their value, struck an 18-month low of 84 Australian cents last
week, as slowing investment in Australia's resources industry
continues to hurt its bottom line.
The bulk of Broadspectrum's earnings, however, come from its
contract to service detention camps on the Pacific islands of Nauru
and Manus, where Australia runs an offshore visa-processing system
for immigrants trying to enter the country without authorization,
often by boat. Broadspectrum, which recently changed its name from
Transfield Services Ltd., is currently negotiating with the
government for a renewal of the agreement.
Analysts say the contract is likely to be extended, but have
warned that revenue and margins are likely to fall following a drop
in the number of asylum seekers due to tougher government policies,
including turning back some boats.
This time, Ferrovial is going directly to shareholders with an
offer that doesn't require a recommendation from Broadspectrum's
board. Management said it would consider the bid, a 59% premium to
Broadspectrum's last closing price, but advised shareholders not to
take action.
Write to Rebecca Thurlow at rebecca.thurlow@wsj.com
(END) Dow Jones Newswires
December 07, 2015 01:15 ET (06:15 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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