Shareholders say no: Besix takeover of Watpac voted down

Shareholders say no: Besix takeover of Watpac voted down

Source: The Australian Financial Review.
By: Larry Schlesinger.

Activist investor Sandon Capital will agitate for boardroom changes at Watpac, after Belgian construction giant Besix failed in its bid to secure two-thirds ownership of the ASX-listed contractor and mining services group.

At a meeting in Brisbane on Thursday, only 67 per cent of voting shares were cast in favour of Besix’s proposal to lift its stake in Watpac to 64.1 per cent from 28.1 per cent currently – below the 75 per cent required under a scheme of arrangement.

Besix’s offer, supported by the Watpac board, was to acquire half the shares the Belgian firm did not already own at 92¢ each. Shares in Watpac closed down 5.7 per cent at 74¢ on Thursday after trading had resumed following the vote.

Sandon Capital, which represented funds holding about three per cent of Watpac shares, were vocal opponents of the Besix deal (along with proxy firm ISS) and argued it was purely opportunistic and undervalued Watpac at a time when the company was struggling.

“Shareholders have rebuked Besix and the Watpac board for what was an ill-conceived scheme to begin with,” Sandon Capital managing director Gabriel Radzyminski told The Australian Financial Review.

“There is now the opportunity and a strong basis for shareholders, including Besix – if they remain shareholders, and we hope they do – to ask for changes in the way the company is run.

“The independent directors need to do a bit of sole searching after recommending a transaction such as this and we will push for changes at the board level,” he said.

Watpac chairman Peter Watson said the voting outcome was a “real disappointment” for what had been a “reasonable offer” from Besix that would have “turbo charged the growth of the company”. “We will continue to work together with Besix on a number of joint ventures,” he said.

“My sense is that Besix likes Australia and they like Watpac and the opportunities we provide, so we hope to see continued close involvement with them,” said Watpac managing director Martin Monro.

Besix had warned prior to the vote that it would consider selling its entire existing stake in Watpac if the deal did not proceed.

Speaking after the vote, Besix chief executive Rick Vandenbergh said: “We will now analyse the results of the vote and take the necessary time to thoroughly evaluate our position and future plans with Watpac.

“We have indicated from the outset that we might review our substantial shareholding in Watpac if the proposal was not accepted. We acknowledge the overwhelming support of shareholders by number and are grateful for their support,” he said.

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