Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Event-Driven

Programmed Skilled Workforce / Event-Driven

Programmed Maintenance Services (PRG AU) made a bid for Skilled Group (SKE AU) in late&nbsp;December 2014 touting scale and synergies. Their cash+scrip offer was worth A$1.45/SKE share at the time and was in January rejected by SKE as too low (the main problem), and opportunistic, after SKE shares had fallen some 60-odd percent for the year, 30% more than PRG. The SKE board also said there wasn't much industrial logic to such a deal despite PRG touting up to post-tax synergies of $15mm/year&nbsp;(worth A$150mm in market cap at 10x according to PRG's letter to SKE).&nbsp;Rumors surfaced in May 2015 that the two parties were back at the negotiating table and this was confirmed by the companies on May 25.&nbsp;On June 24th 2015, PRG came back with a slightly higher bid, lifting terms from .5032 shares of PRG + 25cts cash to .55 shares of PRG + 25cts cash, an increase of 9.3% in terms of share count making the new offer worth A$1.79/ share of SKE.&nbsp;Just over half the difference between the old bid and the new bid was due to PRG's shares having risen 9.3% since the old bid. The other half was an increase in the number of PRG shares offered.&nbsp;Programmed boss Chris Sutherland will lead the post-merger organisation, with Skilled chief Angus McKay leaving the group. SKE's board seems to have seen&nbsp;Upon the new bid,&nbsp;SKE's Board unanimously recommended the offer&nbsp;(doc&nbsp;<a href="http://www.asx.com.au/asxpdf/20150624/pdf/42zcn5mf3gnljy.pdf" target="_blank">here</a>).&nbsp;Yesterday, the <a href="http://www.skilled.com.au/media/189659/150321-Explanatory-Memorandum-Scheme-Meeting-289p.pdf" target="_blank">Scheme Doc</a>&nbsp;was released after the First Court date ordered a Scheme Meeting for Sep25, with the Independent Expert (Grant Samuels)&nbsp;saying the deal was fair (if at the low end of the valuation range) and that "Skilled shareholders will be better off if the scheme proceeds" (and threatening a possible fall below the pre-deal&nbsp;levels $1.20-1.30). &nbsp;Given the fall in oil and other commodities, and the likely ongoing weakness in the offshore oil &amp; gas and onshore mining sectors where Skilled gets a significant portion of revenue historically (57% last year), I would tend to agree.&nbsp;More below the fold...

Programmed Maintenance Services (PRG AU) made a bid for Skilled Group (SKE AU) in late&nbsp;December 2014 touting scale and synergies. Their cash+scrip offer was worth A$1.45/SKE share at the time and was in January rejected by SKE as too low (the main problem), and opportunistic, after SKE shares had fallen some 60-odd percent for the year, 30% more than PRG. The SKE board also said there wasn't much industrial logic to such a deal despite PRG touting up to post-tax synergies of $15mm/year&nbsp;(worth A$150mm in market cap at 10x according to PRG's letter to SKE).&nbsp;Rumors surfaced in May 2015 that the two parties were back at the negotiating table and this was confirmed by the companies on May 25.&nbsp;On June 24th 2015, PRG came back with a slightly higher bid, lifting terms from .5032 shares of PRG + 25cts cash to .55 shares of PRG + 25cts cash, an increase of 9.3% in terms of share count making the new offer worth A$1.79/ share of SKE.&nbsp;Just over half the difference between the old bid and the new bid was due to PRG's shares having risen 9.3% since the old bid. The other half was an increase in the number of PRG shares offered.&nbsp;Programmed boss Chris Sutherland will lead the post-merger organisation, with Skilled chief Angus McKay leaving the group. SKE's board seems to have seen&nbsp;Upon the new bid,&nbsp;SKE's Board unanimously recommended the offer&nbsp;(doc&nbsp;here).&nbsp;Yesterday, the Scheme Doc&nbsp;was released after the First Court date ordered a Scheme Meeting for Sep25, with the Independent Expert (Grant Samuels)&nbsp;saying the deal was fair (if at the low end of the valuation range) and that "Skilled shareholders will be better off if the scheme proceeds" (and threatening a possible fall below the pre-deal&nbsp;levels $1.20-1.30). &nbsp;Given the fall in oil and other commodities, and the likely ongoing weakness in the offshore oil &amp; gas and onshore mining sectors where Skilled gets a significant portion of revenue historically (57% last year), I would tend to agree.&nbsp;More below the fold...

Skilled | PRG - Scheme Doc Out Last Friday, Franking Eligibility Ends Soonish

Australia

Programmed Maintenance Services Limited provides property maintenance services, primarily commercial painting maintenance services in Australia and New Zealand. The Company also provides several outsourcing services including industrial plumbing maintenance, grounds management, landscape and horticultural services and engineering services.

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Programmed Maintenance Serv (PRG AU)

Skilled | PRG - Scheme Doc Out Last Friday, Franking Eligibility Ends Soonish

Programmed Maintenance Services (PRG AU) made a bid for Skilled Group (SKE AU) in late December 2014 touting scale and synergies. Their cash+scrip...

Travis Lundy

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