Why the Bradken Share Price Lost a Third of its Value Today

What happened to the Bradken share price?

Mining services group Bradken Ltd [ASX:BKN] is down more than 33% today after takeover talks with private equity groups Pacific Equity Partners and Bain Capital Asia fell through.

Investors were clearly disappointed. The share price fell to as low as $2.59 per share this morning. It’s now trading at $2.73, but that’s still down 33.6% from its opening price of $3.08.

Why did this happen to BKN shares?

The private equity consortium made a bid for Bradken in December, with an indicative offer of $5.10 per share. That’s a 65% premium to last night’s closing price. But prior to the market opening this morning, Bradken told shareholders that all negotiations had ceased.

The falling iron ore price has much to do with the private equity groups pulling out of the deal. As the group told shareholders, ‘the recent volatility in global commodity and financing markets has impacted the consortium’s ability to obtain financing on terms acceptable’.

What now for Bradken Ltd?

Bradken reports its half yearly results on February 10. It will be interesting to see if the group can return to profitable growth. It hopes to do so through cost cutting measures and with its recent foundry acquisition in India.

The mining services sector has faced plenty of bad news of late, as it struggles in the face of falling commodity prices.

Other mining services stock are having a tough day too: Leighton Holdings [ASX:LEI] is down 1.27%, Downer EDI [ASX:DOW] is 0.94% lower, while NRW Holdings [ASX:NWH] is down 2.42%.


Meagan Evans,
for Markets and Money

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Meagan Evans
Meagan Evans, has seen from the inside of the investment industry how easy money can lead to bad management decisions. She holds a degree in Finance and a Master’s in Business Administration and, as a Certified Financial Technician, Meagan employs both technical and fundamental analysis to make solid investment decisions

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