Cardno considers improved Crescent offer

Crescent Capital Investments has sweetened its takeover offer for infrastructure services group Cardno, boosting the deal to $3.45 per share, one week after competitor Coffey announced a friendly takeover deal with global player Tetra Tech.

Cardno told shareholders to reject Cresent’s $3.15 per share offer last month, saying it was opportunistic, unsolicited, and subject to a number of conditions.

However, Crescent’s improved offer has raised the cash value and removed all conditions, leaving Cardno to revise its stance on the proposal.

In a statement, Cardno advised its short-to-medium term investors might want to consider accepting the increased offer, but longer-term investors should equally consider rejecting the offer.

“All current directors own Cardno shares and consider themselves as longer-term shareholders with a longer-term investment horizon,” the company said.

“None of the directors currently intend to accept the Crescent offer in respect of their shareholdings but may review this position if Crescent obtains control of Cardno.”

The increased one-for-two cash offer is a 38 per cent premium to Cardno’s closing price prior to the announcement of the original offer, but is still less than the assessed value of the business by an independent expert, which was between $3.74 and $4.13 per share.

As part of the increased offer, Cardno has agreed to a board restructure plan if Crescent gains a minimum 30 per cent stake.

Two current Cardno non-executive directors will immediately resign and be replaced by one new independent non-executive director nominated by Crescent, and other three Crescent nominees.

After a three month transition period, all remaining non-executive directors, including chairman John Marlay, will resign if requested by Crescent, and will be replaced by an equivalent number of new independent non-executive directors nominated by Crescent.

The final board will comprise managing director and CEO Richard Wankmuller, four independent non-executive directors and three Crescent nominees.

The offer period has been extended to November 2.

It follows news last week that engineering consulting company Coffey had accepted a takeover offer from Nasdaq-listed Tetra Tech for 42.5 cents per share.

The offer was a 130 per cent premium to Coffey’s closing share price the day before the offer was made, and a 148 per cent premium to its 30 day volume-weighted average price.

Coffey chairman John Mulcahy said Tetra’s offer represented better value for shareholders than the market had been prepared to pay because it delivered strong operational benefits for Tetra.

“Whilst this is a valuable opportunity for shareholders it is also very beneficial for the highly talented Coffey team of employees who should see enhanced career opportunities as part of a combined Tetra and Coffey global business,” Mr Mulcahy said.

Gresham Partners acted as financial adviser to Coffey, while Norton Rose Fulbright acted as legal adviser.

Cardno shares closed 7.8 per cent higher to $3.04 each.