Shares in Johns Lyng Group rallied sharply on Wednesday, soaring as much as 19.3% to AUD3.03 – marking the company’s strongest intraday performance on record – following the announcement of a takeover approach from Australian private equity firm Pacific Equity Partners (PEP).
The offer, which was made after the market closed on 16 May, includes provisions that would allow Scott Didier, Johns Lyng’s founder and largest shareholder, to receive scrip consideration and retain an equity interest in the privatised business. The offer triggered a strong market reaction, propelling Johns Lyng’s market capitalisation to approximately AUD857.8m ($558.6m).
PEP has been granted a period of exclusive due diligence as it progresses its evaluation of the deal.
Johns Lyng, which provides property restoration and building services, had been under pressure following a challenging February reporting season, where its shares fell 31% in a single session post-earnings.
Despite recent headwinds, the company has remained active on the M&A front. In 2023, it completed the acquisitions of Smoke Alarms Australia and Linkfire, supported by an AUD65m equity raise underwritten by JP Morgan.
It also secured an 87.4% stake in Keystone Group, a Queensland-based insurance builder, as part of its strategic expansion.
Market conditions for property-related businesses in Australia have been impacted by rising living costs and a softening housing market. However, sentiment is expected to improve amid a potential shift in monetary policy by the Reserve Bank of Australia.
Institutional investors AustralianSuper and Washington H. Soul Pattinson are among Johns Lyng’s top shareholders, jointly holding a stake of more than 9%. Both declined to comment on the proposed transaction when contacted.
