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Melbourne-headquartered insurance building and restoration services company Johns Lyng Group (ASX: JLG) has confirmed it is in exclusive discussions with suitor Pacific Equity Partners (PEP), which has made a non-binding takeover offer with no price disclosed.
After trading at a 56 per cent year-over-year discount prior to the opening of trade this morning with a market capitalisation of $719.1 million, Johns Lyng shares have jumped 14.96 per cent to $2.92 at the time of publication.
Johns Lyng confirms it received the indicative offer after the market closed on 16 May, and on 29 May the two parties signed an exclusivity deed for due diligence so that PEP - acting on behalf of funds it advises - can work towards putting forward a binding offer.
Whilst a price tag hasn't been attached to the proposal yet, PEP's intention is to acquire 100 per cent of issued shares via a scheme of arrangement, including an offer for certain members of the Johns Lyng senior management team to receive a scrip consideration to retain an interest in the business.
This includes managing director and chief executive officer Scott Didier, Johns Lyng's largest shareholder who had an almost 18 per cent stake at the end of FY24.
The period of exclusivity will last until 5pm on 11 July, and was granted by an independent board committee comprising non-executive chair Peter Nash, and non-executive directors Peter Dixon, Alison Terry and Alexander Silver.
"Shareholders do not need to take any action in relation to the indicative proposal," the company stated.
"It should be noted that there is no certainty that the discussions with PEP will result in any transaction and no assurance is given that a transaction will proceed.
"Any such transaction would require approval by JLG's independent board committee, and be subject to approval from the Foreign Investment Review Board and ultimately subject to approval from JLG’s shareholders and the Court (among other conditions)."
JLG has engaged JP Morgan and Nomura as its financial advisers and MinterEllison as its legal adviser.
The company has issued several new substantial holder notices since the indicative offer was received, although this does not imply any impropriety, involving large global investment houses including State Street Corporation, Citigroup Global Markets Australia, and Norges Bank.
In February the company downgraded its earnings forecast for FY25 by 4.5 per cent to an EBITDA of $126.5 million, after "benign weather conditions" in the December half led to a reduced volume of insurance claims and CAT-related work.
Its work ramp-up in the Northern Rivers region of New South Wales progressed more slowly than expected, while in the United States, project commencement delays also impacted performance.
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