* Spotless says it wants at least A$2.80 per share
* Shares jump 4.3 pct in early trade
* Shareholder says board should not set price condition on due diligence
* PEP to respond later on Monday - spokeswoman
By Victoria Thieberger
MELBOURNE, Jan 9 (Reuters) - Australian cleaning services company Spotless Group said it would recommend an offer from Pacific Equity Partners if the private equity firm raised its offer to at least A$2.80 per share, or A$743 million ($760 million).
“In the current circumstances, this is the lowest price at which the Spotless board would be willing to unanimously recommend a scheme of arrangement,” the company said in a statement.
That would be up from PEP’s already sweetened offer of A$2.68 per share.
The comments helped push Spotless shares up 4.3 percent in early trade to A$2.43. The shares were trading at A$2.38 at 0249 GMT.
A spokeswoman for PEP said a statement would be issued later on Monday.
Spotless said if PEP met its price, the board would then allow non-exclusive due diligence. It also wanted to see evidence of secured debt financing for a sweetened proposal from PEP, one of Australia’s largest buyout firms.
“It seems an obstructionist way of going about things,” said Simon Mawhinney, analyst at Orbis Investment Management, which holds 8.45 percent of Spotless.
“Putting in a price now and making that subject to whether the board allows or doesn’t allow due diligence in the first place is too restrictive and certainly not something we are pleased about,” he said.
Mawhinney said Orbis, the third-largest shareholder in Spotless, had not been contacted by the board prior to its announcement on Monday.
“It is up to shareholders to decide in their mind what is fair and reasonable,” he said.
Spotless, which provides services including cleaning, security and catering, is best known for its catering contract for selling meat pies at the Melbourne Cricket Ground.
The company is tightly held, with five institutions holding 40.5 percent of its issued capital.
In a management presentation to PEP on Dec. 21, Spotless said it expects to achieve double-digit earnings growth over the next four years, through winning more and bigger contracts as companies outsource facility services.
After that briefing, Credit Suisse said its valuation for Spotless based on its own earnings forecasts was A$2.74 per share. However, that would rise to A$3.12 per share if the company achieved the mid-point of its earnings target, Credit Suisse said.
Spotless has 3,700 commercial cleaning contracts in more than 5,000 client sites across Australia and New Zealand, according to its web site.
Early last year, Spotless knocked back a A$657 million bid from U.S. buyout giant Blackstone Group.