Close the Loop Projects $11m-$13m EBITDA as Acquisition Talks End
Close the Loop Limited has ended acquisition discussions with Adamantem Capital but remains confident in its standalone growth strategy, projecting steady revenue and an EBITDA range of $11m-$13m for the first half of 2025.
- Termination of acquisition talks with Adamantem Capital
- Indicative proposal valued at $0.27 per share withdrawn
- 1H25 revenue expected to match prior period
- EBITDA forecast between $11m and $13m amid temporary operational challenges
- Delay in Mexicali facility opening impacts short-term business mix
Termination of Acquisition Discussions
Close the Loop Limited (ASX:CLG) has officially ceased negotiations with Adamantem Capital regarding the latter's indicative proposal to acquire the company at $0.27 per share via a scheme of arrangement. The discussions, which spanned several months and involved complex commercial considerations, ultimately failed to reach alignment on terms acceptable to both parties.
This development marks a significant moment for Close the Loop, which had been under market scrutiny following Adamantem's approach. The breakdown underscores the challenges inherent in structuring deals within the circular economy sector, where operational nuances and strategic visions must closely align.
Strategic Confidence as a Standalone Entity
Despite the setback, Close the Loop's board remains resolute in its commitment to the company's standalone strategic plan. The firm continues to target the expanding global IT refurbishment market, leveraging its footprint across the United States, Australia, South Africa, and Europe. This confidence signals management’s belief in the company’s intrinsic value and growth prospects without the need for immediate change of control.
Nevertheless, the board has not closed the door on future acquisition proposals, emphasizing a continued focus on maximising shareholder value. This stance keeps the company open to potential strategic alternatives that could emerge in a dynamic market environment.
Financial Outlook and Operational Challenges
Close the Loop is in the process of finalising its half-year results for 1H25. Preliminary guidance indicates that revenue will be broadly consistent with the prior corresponding period, reflecting stable demand and operational continuity. However, EBITDA is expected to fall within a range of $11 million to $13 million, impacted by a temporary shift in business mix and delays in the opening of the Mexicali facility.
The Mexicali site, a key component of the company’s global expansion and sustainability initiatives, has experienced setbacks that have compressed near-term earnings. Management is actively addressing these issues and anticipates resolution in the coming months, which could restore momentum and improve profitability.
Positioning in the Circular Economy
Close the Loop’s operations span a broad spectrum of sustainable activities, including the refurbishment of IT equipment and the recycling of print consumables, plastics, and other materials. Its commitment to 'Zero Waste to Landfill' positions the company as a leader in the circular economy, a sector attracting increasing investor and regulatory attention globally.
With sustainability becoming a central theme in corporate strategy and investment, Close the Loop’s ability to navigate short-term operational hurdles while maintaining its environmental mission will be critical to sustaining investor confidence and unlocking long-term value.
Bottom Line?
As Close the Loop navigates operational headwinds and remains open to future deals, investors will watch closely for signs of strategic shifts and recovery in upcoming results.
Questions in the middle?
- Will Close the Loop receive new acquisition proposals following the Adamantem deal collapse?
- How quickly can the Mexicali facility delays be resolved to restore EBITDA growth?
- What impact will the temporary business mix shift have on longer-term profitability?
