Mining services company Sedgman expects to sharply boost first half profit and has pledged a special dividend for shareholders, as it looks to fend off a takeover bid from construction giant CIMIC.
In a letter to shareholders, chairman Rob McDonald said the company expects to unveil a nearly 70 per cent rise in its first half net profit to between $7.5 million and $8 million, despite subdued market conditions.
It had posted net profit of $4.7 million in the same period last year.
While the second half of the financial year is likely to be softer, the company is confident about its order book for FY 2017 and beyond, he said.
Mr McDonald also said Sedgman will announce a fully franked special dividend at the time of its half year results in February, in addition to its normal interim dividend.
Last week, CIMIC launched its $243 million takeover play for the company as part of its efforts to strengthen its hold in the Australian market.
It made an unconditional offer to buy the 63.01 per cent of Sedgman shares it did not already own, at a price of $1.07 each, implying a 35 per cent premium to Sedgman's closing price ahead of the announcement.
CIMIC, already Sedgman's largest shareholder, separately said on Tuesday it had raised its holding to 38.4 per cent.
The construction giant, formerly called Leighton Holdings, has been a long-time strategic investor in Brisbane-based Sedgman, which provides construction and maintenance services to the global mining industry.
In November, CIMIC surprised Sedgman's board by voting against most resolutions at the company's annual general meeting, resulting in three of its directors having to step down.
At the time, it had demanded more representation on the company's board and asked that Sedgman's founder directors be removed, but had been rebuffed.
On Tuesday, Sedgman again urged its shareholders not to take any action on CIMIC's offer, as its board considers the merits of the takeover.
Sedgman shares were trading flat at $1.07 each at 1524.
Share
