The controversial Tory party donor Lord Ashcroft has substantially boosted his coffers after agreeing to sell his cleaning services company OneSource Services at a staggering premium of over 600 per cent.
The US company ABM Industries has agreed to pay £179m to acquire the Belize-based company, which made a loss of about £1m last year. The surprise offer was pitched at £48.10 a share, representing a 620 per cent premium to the 655p price that OneSource closed at last week.
As a result of the deal, OneSource shares surged nearly 570 per cent to £44.50, still below the offer price.
Lord Ashcroft, the deputy chairman of the Conservative Party who made his fortune in cleaning services, owns 74 per cent of OneSource and is the company's chairman. The cleaning company was split out of his investment vehicle BB Holdings last year.
The deal could expand Lord Ashcroft's personal wealth by £133m, augmenting his £800m fortune. The extra funds will come in handy as Lord Ashcroft continues to pour money into the Tories' campaign to unseat the Labour Government. He has already invested millions in David Cameron's campaign and looks set to continue in his quest to return the Conservatives to power from his base in the tax haven of Belize.
ABM has paid an unprecedented premium to acquire its rival in the janitorial services field, but argued that it can justify the price through cost synergies and tax benefits.
ABM, founded in 1909 as a one-man window washing service, said that OneSource carries forward nearly £100m in tax benefits accrued from previous losses, which will slice £7m a year from the US company's annual tax bill.
ABM also expects the deal to yield cost savings of up to £25m a year by cutting duplicated jobs and combining facilities and back office functions. In the first year after the deal is completed, it expects to save £16m. Stripping out integration costs, ABM said the deal will enhance its earnings within six months of the deal completing next month as it improves OneSource's margins.
Henrik Slipsager, ABM's chief executive officer, said: "We saw an opportunity to accelerate our growth strategy and we seized it. Our janitorial division has been ABM's best and most consistent performer in recent years, and this investment will provide that team a broader base to continue domestic expansion. Clients today are demanding a range of facilities services from a single source and increasingly seek a company with this depth of capabilities within a broad geographic reach."
OneSource, which also provides landscaping and general maintenance services, had sales of more than £400m last year. It employs 31,000 serving a variety of clients including US government agencies and theme parks as well as customers in the construction and aviation industries.
Lord Ashcroft said: "This is the right move at the right time for OneSource, our clients and our employees."
The City veteran looks likely to maintain a stake in the business by taking part of his payment as a pre-close dividend of up to £25m, which will be funnelled into an AIM-listed subsidiary.Reuse content