Metlifecare Ltd said on Friday it had entered into a new scheme implementation agreement for Swedish fund manager EQT to buy the NZX-listed retirement village owner & developer for $6/share – $1/share less than under their original agreement entered into on 29 December and withdrawn on 7 April.
The transaction is through Asia Pacific Village Group Ltd, owned by EQT Infrastructure IV fund and managed by EQT Fund Management Sàrl.
The disclosure came shortly after the NZ Superannuation Fund informed the exchange it had entered a voting deed with EQT to vote its 19.9% interest in favour of the scheme at no less than $6/share.
The parties agreed to discontinue all litigation & settle all disputes related to the original agreement, each party covering its own costs.
4 Metlifecare directors – Chris Aiken, Mark Binns, Alistair Ryan & Rod Snodgrass – voted for this proposal to be put to shareholders.
Metlifecare chair Kim Ellis didn’t recommend the revised scheme and the sixth director, Carolyn Steele, abstained from making a recommendation given her association with the NZ Super Fund.
The board said it had received strong investor support for the scheme, with a number of shareholders indicating they preferred a scheme at $6 over the uncertainty of prolonged litigation.
A minority of shareholders directors spoke to indicated $6 was below or at the lower end of their own valuation range.
The board majority believed that, while this had been a difficult decision, the uncertainty & disruption associated with litigation and the potential risks inherent in a Covid-19 environment made the $6 offer reasonable. It was at a 14.9% premium to the last closing price before Metlifecare’s 6 July announcement it had received a new non-binding indicative offer from EQT.
Mr Ellis believed the scheme consideration under the new agreement didn’t represent fair value and that the price should be at least at the $6.35 midpoint of the $5.80-6.90/share range KordaMentha determined on 5 June. But he also noted that the indications of majority shareholder support for the $6 scheme reduced the prospect of negotiating a higher price.
When Metlifecare first disclosed a buyout offer on 20 November, its share price jumped from $5.08 to $5.73. The price reached $6.93 on 14 February but, as the Covid-19 virus began to impact the economy, the price plummeted from $6.87 on 2 March to $4.25.
Under the new agreement, a new independent advisor’s report must be prepared in accordance with Takeovers Panel guidance.
Metlifecare expects to hold the special meeting of shareholders to vote on the scheme in late September and expects the scheme would be implemented in late October.
The scheme is subject to customary conditions including shareholder approval, High Court approval, Overseas Investment Office consent and there being no prescribed occurrence (as defined in the SIA). Unlike the original scheme implementation agreement, the new agreement is not subject to a “material adverse change” clause and the transaction price doesn’t have to fall within or above the independent advisor’s valuation range.
The original offer valued Metlifecare at $1.493 billion. On 8 April, the day after EQT announced it was pulling out, the on-market price got down to $3.16 – a total $674 million. This $6 offer values it at $1.28 billion.
Metlifecare owns 25 retirement villages.
8 July 2020: Metlifecare gets new EQT buyout offer, calls off shareholder meeting
9 June 2020: Metlifecare chases shareholder support for legal fight, releases advisor’s report
3 June 2020: Metlifecare gets nowhere in court, will call shareholder meeting on canned buyout
29 April 2020: Swedish fund gives notice of complete exit from Metlifecare as NZ company repeats “you can’t” bluster
8 April 2020: Metlifecare buyer sends pullout notice, Metlifecare says it can’t
25 March 2020: Metlifecare moves buyout scheme forward though market price way below offer
20 November 2019: Metlifecare gets buyout offer, suspends share buyback
Attribution: Company releases.