Engineering group Bradken has received a takeover offer from a private equity consortium.
The offer comes a day after Bradken confirmed that it would be closing its foundry in the Adelaide suburb of Kilburn by the end of 2015, with almost 120 workers to lose their jobs.
Pacific Equity Partners and Bain Capital Asia have made a non-binding indicative proposal to acquire 100 per cent of ordinary Bradken shares for $5.10 each.
This is a premium on Thursday’s closing share price of $3.32.
The offer would be conditional on due diligence and support from the board.
The private equity consortium made confidential, non-binding and indicative proposals to Bradken in August to acquire all its shares for $6 each but no offer was forthcoming at the time.
Bradken told the Australian Securities Exchange that that proposal was made during a time of significant share market volatility and falling commodity prices.
“In this context, the board has determined that it is important for shareholders to be aware of the proposal,” it said.
Bradken said its board remained confident of its growth prospects and believed it was well placed to continue to grow and maintain its earnings despite market volatility and “financial difficulties of some competitors and peers”.
Bradken said a restructuring would achieve savings and forecast to achieve run-rate underlying earnings savings equivalent to $27 million a year by July 2015.
It expects to settle on an Indian foundry at Tamil Nadu by January 2015.
Bradken has hired Merrill Lynch and Rothschild as financial advisers and King & Wood Mallesons as legal adviser for the takeover offer.
Managing director and chief executive officer Brian Hodges told InDaily that the Adelaide operation was no longer profitable and competitive with global, international plants.
“It’s a difficult time for the company and for the employees who, as everybody does, do a really good job,” Hodges said.
“We have to move with the times which basically means to move to larger, more modern plants offshore.”
Hodges said Bradken had attempted to expand the plant at Kilburn quite considerably but the cost of maintaining the plant was too high compared with running sites abroad, such as in China.
“It is a well run plant with an excellent work force but it’s not competitive.”
A letter sent to employed from Bradken’s executive general manager of mineral processing Brad Ward, attributed the closure of the plant to the high costs of labour, site services and utilities that make the foundry “unsustainable”.
– with AAP
