Despite the struggles endured by aged care operators through the pandemic, business has been booming for most, including Japara Healthcare (ASX: JHC) whose Board of Directors is recommending a $588 million takeover offer from rival Calvary after a spirited bidding war.
The offer for Japara’s 50 homes and five retirement villages that house more than 4,000 residents comes via a takeover offer to acquire 100% of JHC shares at $1.40 each. This represents an 81% premium to the 30-day volume weighted average.
Over that period however, JHC shares have continued to climb to close yesterday at $1.165 for the offer to still be a 20% premium on the previous close. If accepted, the offer implies an equity value of $380 million with an enterprise value of $588 million under the Scheme Implementation Deed.
“The Japara Board is pleased to unanimously recommend this proposal to shareholders. In making this assessment, the Board considered a number of alternatives including a competing proposal and standalone value creation from the execution of our existing strategy,” said Japara Chairman, Linda Bardo.
“After careful consideration of the future opportunities for Japara, along with sector and regulatory uncertainty, and execution risks, the Board has determined that the Scheme delivers compelling value to Japara shareholders”.
A takeover of Japara has been on the cards for several months now with the initial offer from Calvary coming on 30 April, 2021 when offering to purchase all JHC shares at $1.04 each. This offer was then increased to $1.20 per share on 7 June.
Bolton Clarke then entered the fray with an offer of $1.22 per share on 15 June which was recommended by the Japara Board unless a superior offer was received which now comes as the $1.40 per share counter-offer from Calvary.
Unlike the earlier offers however, Japara have now confirmed that a Scheme Consideration meeting will take place in October 2021 whereby shareholders are being unanimously recommended by the Board to vote in favour of the scheme.
Once settled, Calvary would consolidate its position as one of the largest community care operators in Australia which currently operates 14 public and private hospitals as well as 17 retirement and aged care facilities.
Established in 1885 as a charitable Catholic non-for-profit organisation, Calvary’s mission is to provide health care to the most vulnerable, including those reaching the end of their life.
For the Half Year ended 31 December 2021, Japara Healthcare reported $220.3m revenue with $8m EBITDA. Despite all the troubles linked to COVID outbreaks in aged care facilities, the Group still had 89% occupancy across their residencies over the period with $137m cash on hand.
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