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After initially knocking back a $3 per share bid from US private equity firm Bain Capital, the board of Estia Health (ASX: EHE) has today received an improved offer from the suitor that has piqued their interest.
The revised $3.20 per share offer comes two months since Estia opened its books to Bain in hopes of receiving a more compelling deal, and represents a 50 per cent premium to EHE’s closing share price of $2.14 on 21 March.
The new bid also would allow Estia to pay fully franked dividends of up to 12cps. Any future dividends paid would reduce the $3.20 share proposal, which values the company at approximately $827 million.
Estia’s board has entered a process deed with Bain Capital and given it 30 business days of exclusive due diligence, while also agreeing to a 20-day ‘no shop’ and ‘no talk’ clause stopping them from soliciting a rival bid.
The board intends to unanimously back the deal in the absence of a superior proposal and an independent expert concluding the proposal is in the best interests of Estia’s shareholders.
Off the back of the announcement, shares in Estia Health have risen 16 per cent to $2.95 each.
“Following careful consideration of the revised proposal the board of Estia Health has determined that it is in the interests of shareholders to progress the proposal and allow Bain Capital to undertake further due diligence to enable it to provide a binding proposal,” Estia Health said in an ASX announcement today.
An initial $775 million offer was lobbed to Estia Health on 24 March, but the $3 per share bid was rejected by the board only 12 days later on the grounds it was not compelling enough to accept.
“In order to determine if Bain Capital is able to formulate an improved proposal, Estia Health has offered to provide a limited period of access to certain non-public financial and other information on a non-exclusive basis,” Estia Health told shareholders at the time.
Founded in 2005, Estia Health has 70-plus aged care homes across Victoria, South Australia, New South Wales and Queensland that offer short-term respite care, long-term care, dementia care and palliative care.
The company reported a $25.3 million net loss after tax for the six months ended 31 December – a sharp increase compared to a loss of $8.1 million a year prior. Revenue increased by nine per cent to hit $373 million.
The revised offer from Bain Capital comes almost three months after the group announced Anthony Rice will come on as chief financial officer (CFO) from mid-July, following a stint as interim CFO for retirement village operator Levande.
The current CFO, Steve Lemlin, will remain with Estia Health until the end of August to ensure a smooth transition.
Estia Health’s board members include Bilton and Dr Gary Weiss, a corporate raider who became chair at Brisbane-based Cromwell Property Group more than a year ago after ARA Group wrested control of the group and instigated a board spill.
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