SYDNEY, Dec 22 (Reuters) - The company which runs Australia's offshore immigration detention camps advised shareholders that a A$692 million ($500 million) takeover bid from Spain's Ferrovial SA FER.MC undervalues it, a sign it will reject the unsolicited offer.
Sydney-listed Broadspectrum Ltd (BRS), which runs the detention camps on the island nation of Nauru and Papua New Guinea's Manus Island, said the offer was "opportunistically timed" to capitalise on a dip in its share price.
While Broadspectrum, formerly called Transfield Services Ltd, is yet to finish its review of the surprise Dec. 7 bid, the letter suggests it already expects to recommend shareholders vote against it.
"The offer undervalues Broadspectrum," Broadspectrum chair Diane Smith-Gander wrote in the letter.
"While Ferrovial has cited some short-term comparisons in its bidders statement, it has not shown how the offer compares against the trading prices of Broadspectrum shares over a broader period."
Smith-Gander noted that Ferrovial's offer of A$1.35 per share is below the same company's offer of A$2.00 a year earlier. Broadspectrum rejected that previous offer as too low.
She also referred to an earnings upgrade Broadspectrum issued a day earlier, saying the company now expected pre-tax earnings of up to A$285 million in the 2016 fiscal year, compared with its earlier forecast of about A$265 million.
Broadspectrum shares were up 1 percent at A$1.33, in line with the broader market and just short of Ferrovial's offer price.
($1 = 1.3906 Australian dollars)
Keyword BROADSPECTRUM M&A/FERROVIAL
