RCR Tomlinson has increased its takeover offer for Norfolk Group to $78 million, $16 million more than the indicative price it announced last month.
RCR said today it had completed due diligence on Norfolk and had increased its offer price to 48 cents per share, up from the 38 cents per share previously.
The engineering group said it would simplify the transaction by increasing the offer and retaining net assets due to uncollected working capital, negating any contingent value rights.
The takeover, which values Norfolk's equity at $77.9 million while maintaining its enterprise value of $140 million, will take place via a scheme of arrangement signed today.
RCR said Norfolk's net debt would be reduced to $62 million due to greater cash flows resulting from the retention of cash, and as such it increased its offer.
RCR Tomlinson chief executive Paul Dalgleish said the proposal provided greater certainty to Norfolk shareholders.
“Following the due diligence process, RCR still believes the proposed acquisition is clearly the appropriate strategic step for RCR at this time,” Mr Dalgleish said in a statement.
“It will deliver to RCR greater diversification of revenues and access to infrastructure markets, particularly those requiring significant technical intellectual capital.”
Norfolk Group’s board of directors has unanimously recommended shareholders accept the offer, while major shareholder Maui Capital has confirmed its intention to support the scheme.
“The scheme provides the certainty of a cash return for Norfolk shareholders and represents a clear and definitive value for the company,” Norfolk chairman Rod Keller said.
“It also permits the company’s balance sheet to be effectively and rapidly restructured to take advantage of the opportunities lying before it.”
At 11:20AM, WST, Norfolk Group shares were down 3.5 cents, trading at 47 cents, while RCR Tomlinson’s stock was down 7 cents, at $2.33.
