Johns Lyng Group receives non-binding takeover bid from Pacific Equity Partners

Johns Lyng Group JLG has received a non-binding, indicative takeover proposal from Australian fund manager Pacific Equity Partners by way of a scheme of arrangement. A specialist in insurance-related property restoration, Johns Lyng said there was no certainty the takeover would go ahead and the company has not revealed any financial details of the bid. If the deal does proceed, it would mark Pacific Equity’s latest move in Australia’s infrastructure and services sector. Challenging environment Johns Lyng shares have been hit hard so far this year and heavy selling during the second half of February in particular saw the price slump 38% in just one week from $4.22 on the 19th to $2.52 on the 26th and then continue a sustained fall to dip below $2 before finally turning around. The company cited a “challenging operating environment” as benign weather conditions Australia-wide led to a reduced volume of insurance claims. Johns Lyng secured an 87.4% controlling stake in Queensland-based insurance building firm Keystone Group last year to strengthen its footprint in the sector. It also spent $61.8m on the acquisition of Smoke Alarms Australia and Linkfire in 2023 as part of an expansion strategy into the essential home services market, funding the deals through a $65m capital raising underwritten by JP Morgan. Due diligence An independent board committee comprising Johns Lyng non-executive chair Peter Nash and non-executive directors Peter Dixon, Alison Terry and Alexander Silver has granted Pacific Equity Partners a period of exclusivity for due diligence and the submission of a binding proposal. The proposal would offer certain Johns Lyng senior managers the opportunity to receive scrip consideration to retain an interest in the business. This includes largest shareholder and chief executive officer Scott Didier, who boosted his shareholding in the company by 7.2% in April after buying $250,000 worth of stock. The board of Johns Lyng has confirmed that shareholders do not need to take any action at this point in time.