27/10/2009 - 07:51

PearlStreet, Campbell in $56m merger

27/10/2009 - 07:51

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Perth-based PearlStreet has recommended shareholders accept a sweetened $56.3 million takeover offer from Campbell Brothers, snubbing Catalyst Investment Managers' recapitalisation proposal.

PearlStreet, Campbell in $56m merger

Perth-based PearlStreet has recommended shareholders accept a sweetened $56.3 million takeover offer from Campbell Brothers, snubbing Catalyst Investment Managers' recapitalisation proposal.

In a statement today, PearlStreet said it had signed a binding agreement with Campbell, which is offering 75 cents cash for each share.

The offer is 34 per cent higher that Campbell's original offer of 56c for each share, an offer made earlier this month and which PearlStreet rejected in favour of a $23 million proposal from Sydney-based private equity group Catalyst Investment Managers.

"The acquisition of PearlStreet will provide Campbell Brothers with an excellent vehicle to grow its presence in the NDT market, and will complement our existing portfolio of testing businesses," Campbell managing director Greg Kilmister said.

Campbell offers laboratory and technical services and makes cleaning and chemical products while PearlStreet is the largest `non-destructive testing' services provider in Australia.

Queensland-based Campbell said its offer represented a total consideration of $108.3 million, after including $63.7 million for equity - including shares and options - and $44.6 million for debt.

The cash offer represented a 142 per cent premium to PearlStreet's five day volume-weighted average price of 31 cents prior to close of trading on September 28, it said.

PearlStreet shareholders will also retain the company's final fiscal 2009 dividend of one cent per share.

"The board unanimously recommends PearlStreet shareholders accept Campbell Brothers' proposed offer, in the absence of a superior proposal," PearlStreet chairman David Eiszele said.

"Campbell Brothers is well placed to take the PearlStreet business to the next stage of its growth."

PearlStreet's directors plan to accept the offer in respect of the shares they own or control.

As a result of the offer, PearlStreet will withdraw its recommendation for a previously announced recapitalisation proposal with Catalyst Investment Managers Pty Ltd.

The Campbell offer is subject to conditions, including a minimum 90 per cent acceptance condition.

News of the sweetened offer sent PearlStreet's shares up 18.5c, or 34 per cent, to 73c at 11:11 AEDT after it came out of a trading halt.

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