Proactiveinvestors recommends
Pdf

Shanks Group snubs Carlyle Group’s final 120p approach

9th Mar 2010, 3:27 pm Shanks Group snubs Carlyle Group’s final 120p approach

Waste manager Shanks Group (LSE: SKS) has ended its discussions with its private equity suitor, the Carlyle Group, saying the international private equity group’s final price indication of 120p per share does not properly reflect Shank’s value.

Carlyle’s final price indication was in line with yesterday’s closing price of 120.4p, but 15p per share lower than December’s preliminary approach of 135p per share. Following this morning’s announcement Shanks’ share price slumped on the London Stock Exchange to trade at a low of 95.9p per share before recovering somewhat to trade at 101.4p in late afternoon deals, down almost 16% on the day.

"The board's response to the approach from Carlyle has always been about price”, Shanks chairman Adrian Auer commented. “Although the timing of their approach was not of our choosing, we have engaged fully and professionally, but Carlyle has failed to offer a price which (in the view of the board) properly reflects the value of the group”. 

Following a meeting between the respective parties yesterday, Shanks concluded that it is unwilling to recommend the 120p offer and that further discussions with Carlyle are not in the interests of Shanks shareholders.

Shanks initially reported Carlyle’s approach in December. Commenting on the ‘highly preliminary’ offer, Shanks had said a cash offer in excess of 150p per share would deliver an ‘appropriate value’ to shareholders. At the time, Shanks reported that it held discussions with its two largest shareholders in reference to the offer and the board’s 150p asking price. And both parties were in support of the board’s valuation, Legal and General (LSE: LGEN) and Schroders (LSE: SDR) hold a combined 32% stake in the company, each holding 16%.

Shanks said it remains committed to a focused strategy around its three principal growth areas of recycling, organic processing and UK PFI. “Shanks is a well-managed group with good strategic positioning in the evolving European waste markets and the board is confident that the group can deliver attractive growth in shareholder value over the medium term", Auer added.

The company noted that the announcement had not been made with the agreement of Carlyle, and if appropriate either Carlyle or Shanks may make further announcements regarding the proposals. Accordingly Shanks said that for the purposes of the Takeover Code, the company remains in an offer period.

No investment advice

The Company is a publisher and is not registered with or authorised by the Financial Services Authority (FSA). You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.