(Reuters) -Australian building services provider Johns Lyng Group said on Friday it had agreed to be acquired by Sherwood BidCo, an entity controlled by private equity investment firm Pacific Equity
Australia's Johns Lyng agrees to $725 million buyout, shares soar
By Roshan Thomas and Rajasik Mukherjee
(Reuters) -Australian building services provider Johns Lyng Group said on Friday it agreed to be bought by investment firm Pacific Equity Partners (PEP) for an equity value of A$1.1 billion ($725 million), sending its shares to a near five-month peak.
The deal comes at a time when the 72-year-old firm navigates a tumultuous period marked by weak financial results and sagging share price.
Johns Lyng said PEP-owned Sherwood Bidco would shell out A$4.00 per share, representing a 25.8% premium to the stock's last close. The deal has been unanimously backed by the Melbourne-headquartered company's independent directors.
"A lucrative outcome for any new investors, but still well below historical highs for long-term shareholders unfortunately," said Luke Winchester, portfolio manager at Merewether Capital.
Shares in Johns Lyng soared as much as 23.3% to A$3.92, their highest since February 21, and were set for their best day ever - if current gains held. The broader ASX200 benchmark 200 index was flat, as of 0345 GMT.
Last month, Johns Lyng announced the takeover approach from Australia-based private markets fund manager PEP and said the offer would allow largest shareholder and CEO Scott Didier to retain a stake in the business by taking share consideration.
The company, which has evolved into a multi-brand building services powerhouse operating across Australia, New Zealand, and the United States, was a major underperformer during the February earnings season. Its stock had slumped 31% on the day of its results.
High living costs have dampened housing demand in Australia, weighing on the commercial real estate sector. But a jump in home prices in June and rising hopes of an interest rate cut by the local central bank in August have lifted sentiment.
($1 = A$1.5172)
(Reporting by Roshan Thomas & Sherin Sunny in Bengaluru; Editing by Subhranshu Sahu, Sumana Nandy and Mohammed Safi Shamsi)
