Takeover offer for drycleaners

A revised $2.25 per share bid by Spotless Services for the third of Taylors Group it does not already own is near the bottom end of an independent adviser's range.

Grant Samuel & Associates valued the Taylors shares, including any premium for control, at between $2.22 and $2.58 per share.

Taylors operates in the linen business, particularly in hospitals.

"Clearly the revised bid of $2.25 is near the bottom of the assessed range," Trevor Kerr, chairman of Taylors' committee of independent directors, said.

"Shareholders should study the Grant Samuel report and the letter from the independent directors, to understand the factors noted in the Grant Samuel report which have influenced the independent directors to recommend acceptance of the offer," Kerr said.

The report made it clear that, through its 66.01 per cent shareholding in Taylors, Spotless effectively controlled the company already and there was therefore almost no chance of another party bidding for the shares.

It also noted the offer was about 12.5 per cent above the closing price the day before the intention to make an offer was announced.

The offer price was also about 31 per cent above the average share price on the preceding 30 trading days, calculated on a volume weighted average share price basis, Kerr said.

"The Grant Samuel report also comments that if the current bid is unsuccessful, the share price could be expected to fall, and that it may be a long time before it reaches the level of the offer again.

"The report makes it clear that Taylors is a mature company with limited growth potential, which has consistently underperformed the NZX-50 Index."

Between 2005 and 2009 Taylors revenues grew only 7.3 per cent, with earnings before interest and tax growing 9.7 per cent over the same period.

"Spotless is adamant that it will not raise its offer again, nor will it proceed with the current offer without the support of the independent directors," Kerr said.

"Taking those circumstances into account, together with the overall picture set out in the Grant Samuel report, the independent directors both believe the sensible action is for shareholders to accept the offer."

Kerr does not hold Taylors' shares, but the other member of the committee of independent directors, Paul East QC, intends to accept the offer for all of his Taylors' shares.

The report and a target company statement are being mailed to Taylors' shareholders this week.

The report said a value range of $60.9 million to $69.6m had been attributed to Taylors' business operations.

Factors taken into account included Taylors' strong market position in the linen business and, in particular, hospitals, and significant capital spending budgeted for 2010 that was forecast to improve both productivity and capacity.

- NZPA