Broadspectrum shares up as it backs bid

Broadspectrum shares have surged more than 30 per cent after the detention centre operator recommended the $769 million takeover bid it had previously rejected.

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The Broadspectrum board had urged shareholders to reject a bid by Spanish infrastructure giant Ferrovial, but had an abrupt change of heart following the Papua New Guinea government’s announcement that it will shut the Manus Island unit run by the Australian firm.

Broadspectrum shares closed 36.0 cents, or 32.14 per cent, higher to $1.48 on Friday, following a trading halt imposed on Thursday.

That’s two cents short of Ferrovial’s offer of $1.50 per security.

Ferrovial issued a statement on Friday morning welcoming Broadspectrum’s recommendation and encouraging shareholders to accept before the offer closes at 1900 AEST on Monday.

Ferrovial said it cannot extend or change its offer.

Broadspectrum’s contract to operate the Australian government’s Manus Island and Nauru offshore detention centres was extended by 12 months in February, and it had been among the bidders for a new five-year deal.

But it said Papua New Guinea’s decision to close the centre following a Supreme Court ruling that it was unconstitutional had “increased the level of near-term uncertainty” to its contract and future earnings.

“It is not possible to definitively determine the nature, scope and timing of any changes or any resulting impact to Broadspectrum, including whether the changes will be positive, negative or neutral from the company’s perspective,” Broadspectrum said in a statement.

The company said it was unlikely that it would have certainty about the potential impact before the closing date for the takeover.

The company recently said it is in a strong financial position, expecting underlying earnings in the range of $280 million and $300 million in the 2015/16 financial year.

Ferrovial has a 8.5 per cent interest in Broadspectrum.