Eclipx share price plummets as McMillian pulls out of takeover

Shares of Australian administrative services provider Eclipx, have plunged to session lows after the company said its net profit for the first five months of FY19 was lower than expected. Eclipx reported its Net profit after tax was down 42.4% compared to last year.

The stock has already fallen 56% on Wednesday and an estimated 65.8% this year.

McMillan calls off takeover

Eclipx's merger with McMillan was called off, after McMillian Shakespeare backed out the takeover, citing Eclipx's poor results as a contributing factor.

In response, McMillan’s shares jumped on Thursday, despite calling off the merger.

McMillan's share price jumped 4.31% to $13.30 at time of writing on Thursday.

Eclipx share price

Eclipx's share price at time of writing has fallen to a record low of $0.825, with an estimated 9.4 million shares traded in just a few hours. This follows the company posting its worst intraday drop to date, making it the largest loser on the ASX200 benchmark.

Eclipx announced the merger with McMillian failed after they were not able to reach an agreement with McMillian on the terms of their proposed scheme. McMillian cited a loss of confidence in Eclipx, after their dismal net profit earnings. The company said in a statement:

‘In the circumstances we don’t think that extending the end date set out in the current scheme documents will resolve these issues, nor do we believe it is in the best interests of McMillian Shakespeare.’

Despite the massive drop in their share price, Eclipx have said they are expecting their FY19 result for their Fleet and Novated businesses to be in line with their results from the previous year.

Eclipx's Fleet and Novated businesses generation $61.2 million net profit after tax and amortisation last year.