Broadspectrum, the Australian infrastructure services firm formerly known as Transfield Services, says a hostile offer for the company from Spain's Ferrovial is likely to lapse next month because New Zealand's Overseas Investment Office won't have made a ruling in time.
Sydney-based Broadspectrum on Monday said it was “highly unlikely” the $A1.35 a share bid would get OIO approval before the March 7 expiry date.
It has rejected Ferrovial’s approach and this week its board reiterated that the bid “significantly undervalues” the infrastructure services firm. The ASX-listed shares last traded at $A1.14 and have dropped 19 per cent this year.
“The NZ OIO’s reported target is to process 90 per cent of applications within 50 business days, although recent statistics suggest that the approval process has taken on average at least 80 business days,” Broadspectrum said.
New Zealand’s foreign investment regime has proved contentious, with strong public opposition to the sale of farmland and residential property to overseas interests. While that doesn’t typically lead to decisions being blocked, delays in approval have been an ongoing concern.
Most recently, NZX-listed robotics manufacturer Scott Technology complained about the slow process in its scheme of arrangement with Brazilian meat processor JBS.
Ferrovial would need OIO approval because Broadspectrum’s New Zealand operations span telecommunications network, roading and other utilities. The Spanish firm hasn’t ruled out raising its offer.
Broadspectrum’s infrastructure segment, which accounts for about a quarter of its revenue, reported an underlying loss before interest tax, depreciation and amortisation of $A14.1 million in its first half, due largely to a $A14.8 million provision against a telecommunications contract in New Zealand.
“This provision, together with temporary delays in (Australian) National Broadband Network volumes, as well as delayed changes in the Chorus commercial model and delays in Crown Fibre awarding ultrafast broadband work packages in New Zealand, resulted in deferral of revenue and a significant earnings impact in the telecommunications sub-sector for the half,” Broadspectrum said.