Australia's Johns Lyng agrees to $725 million buyout, shares soar

By Roshan Thomas and Rajasik Mukherjee

(Reuters) -Australian building services provider Johns Lyng Group said on Friday it agreed to be bought by investment firm Pacific Equity Partners (PEP) for an equity value of A$1.1 billion ($725 million), sending its shares to a near five-month peak.

The deal comes at a time when the 72-year-old firm navigates a tumultuous period marked by weak financial results and sagging share price.

Johns Lyng said PEP-owned Sherwood Bidco would shell out A$4.00 per share, representing a 25.8% premium to the stock's last close. The deal has been unanimously backed by the Melbourne-headquartered company's independent directors.

"A lucrative outcome for any new investors, but still well below historical highs for long-term shareholders unfortunately," said Luke Winchester, portfolio manager at Merewether Capital.

Shares in Johns Lyng soared as much as 23.3% to A$3.92, their highest since February 21, and were set for their best day ever - if current gains held. The broader ASX200 benchmark 200 index was flat, as of 0345 GMT.

Last month, Johns Lyng announced the takeover approach from Australia-based private markets fund manager PEP and said the offer would allow largest shareholder and CEO Scott Didier to retain a stake in the business by taking share consideration.

The company, which has evolved into a multi-brand building services powerhouse operating across Australia, New Zealand, and the United States, was a major underperformer during the February earnings season. Its stock had slumped 31% on the day of its results.

High living costs have dampened housing demand in Australia, weighing on the commercial real estate sector. But a jump in home prices in June and rising hopes of an interest rate cut by the local central bank in August have lifted sentiment.

($1 = A$1.5172)

(Reporting by Roshan Thomas & Sherin Sunny in Bengaluru; Editing by Subhranshu Sahu, Sumana Nandy and Mohammed Safi Shamsi)