Bain Capital's $551 mln bid sends Estia Health shares to near 5-year high (updated)

Estia Health

07/08/2023 02:35

(Adds analyst quote in paragraphs 11-12)

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      Shares up nearly 10%
    

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      Board recommends shareholder vote in favor
    

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      Shareholder vote scheduled for November
    

  
    By Rishav Chatterjee and Scott Murdoch
       Aug 7 (Reuters) - Global private equity firm Bain
Capital will pay A$838 million  ($551.3 million) for Australian
aged care operator Estia Health  EHE.AX , pushing the takeover
target's stock to a near five-year high in a sign that appetite
for deals down under remains strong.
    The Sydney-based Estia said on Monday it had signed a deal
to finalise the takeover at A$3.20 per share which is a 25.5%
premium to Estia's stock closing price on June 6, before the
offer was first disclosed.
    Shares of Estia Health were up 9.9% at A$3.12 as of 0045
GMT, their highest since Sept 2018. 
    The purchase extends Bain Capital's focus on Australia where
its prized asset is the Virgin Australia airline it bought
during the pandemic, which is currently preparing for a public
market listing.
    Bain Capital did not immediately respond to a Reuters
request for comment.
    Estia's stock has seesawed from a peak of $A7 in 2015 to as
low as A$1 in March 2020 when Australia began to implement
strict pandemic lockdowns.
    In June, the company updated the market on its intentions to
back Bain Capital's increased offer of $A3 per share to A$3.20.
It said it would provide limited access to its books to the
suitor in April.
    Estia is one of Australia's largest aged care operators,
having more than 6,500 places in 70 sites across the country.
    "The Board is confident as to the outlook for the business,
however, it recognises that the scheme allows shareholders to
realise certain cash value now at an attractive premium," Estia
Chair Gary Weiss said on Monday. 
    Estia's board unanimously recommended its shareholders vote
in favor of the proposal. A shareholder vote is set to happen in
November. 
    "The problem is now that with the rapid rise in interest
rates the buyers that would buy a restructured asset post-Bain
Capital are greatly reduced in the market," said Brad Smoling,
Smoling Stockbroking managing director. 
    "If they acquire Estia Health they may be stuck with it in
the days ahead."
    The company said in a statement that under the deal, it is
permitted to pay fully franked dividends of up to A$0.12 per
share. 


($1 = 1.5200 Australian dollars)

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Australia's Estia Health soars on sweetened $552 mln bid from
Bain Capital     urn:newsml:reuters.com:*:nL4N37Z00G
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 (Reporting by Rishav Chatterjee in Bengaluru and Scott Murdoch
in Sydney; Editing by Sherry Jacob-Phillips and Stephen Coates)
 ((Rishav.Chatterjee@thomsonreuters.com;))