Troubled mining equipment and machinery maker Bradken has rejected a $428 million takeover bid, just four months after receiving an offer more than double the size.
Private equity firm Pacific Equity Partners (PEP) returned to the table on Wednesday with an indicative proposal to pay $2.50 for each Bradken share, alongside new partner Koch Industries.
PEP and Bain Capital made a bid of $872 million for Bradken in December, but that collapsed in January due to the impact of plunging commodity prices.
Rumours of a new offer from PEP sent Bradken's shares soaring on Thursday, rising as much as 23 per cent to $2.39 before the company requested a trading halt.
Soon after, it confirmed it had received a new and reduced offer, and rejected it.
"The board of Bradken considered the proposal and determined that it does not represent fair value and accordingly determined not to engage further," the company said.
Bradken shares eased when they returned to trade, but still closed 35 cents higher, up 18 per cent at $2.29.
IG market strategist Evan Lucas said Bradken was a "distressed asset" and a suitable target for private equity firms looking to grab assets at a low price.
Bradken shares were worth $6.65 less than 18 months ago, before it posted a 68 per cent fall in profit for 2013/14 and a loss of $93 million in the first half of 2014/15.
The company cut about 500 jobs in a major restructure in 2013/14, amid lower revenue from its mining products, mineral processing, rail and engineering divisions.
Mr Lucas said PEP and Koch, the second biggest privately-owned company in the United States, may return with a higher bid but it was unlikely to exceed $2.75 a share.
Investors will be asking if there will be an upturn in the mining services sector to warrant a higher bid price.
"Will mining services return to the glory they were? Probably not," he said.
Share
