Swedish private equity firm EQT AB has again offered to acquire New Zealand’s Metlifecare, after expressing intent to terminate the deal in April, but at a lower takeover bid of NZ$1.28 billion ($837 million).
In a statement, Metlifecare said it received the non-binding indicative offer (NBIO) from Asia Pacific Village Group (APVG), a unit of EQT, to acquire all its shares at NZ$6 per share in cash. The price is lower than the NZ$7 per share that APVG offered by way of a scheme agreement in December 2019.
Metlifecare, one of New Zealand’s largest retirement village operators, had earlier asked the country’s high court to order APGV to fulfil its contractual obligations entered on December 29, 2019.
It sought the intervention after EQT issued a notice in April that it intends to terminate the agreement with Metlifecare due to “circumstances having arisen.”
APVG said the coronavirus pandemic triggered the Material Adverse Change clause under the companies’ agreement because it has reduced or could reduce Metlifecare’s tangible assets and could reduce its underlying net profit by at least 10 per cent in the fiscal year 2020, or in the following two years.
Metlifecare, however, insisted that it remains committed to completing the deal and that there was no lawful basis for termination.
The new offer from APVG comes less than a week before Metlifecare was scheduled to conduct a special meeting of shareholders to seek support to continue litigation against APVG and EQT over their decision to terminate the original agreement.
Aside from the lower consideration per share, the revised terms of the proposed new agreement include no material adverse change condition, no requirement that the scheme consideration be within or above the independent adviser’s valuation range, and a requirement that a majority of Metlifecare directors recommend that shareholders vote in favour of the new deal.
“We have always indicated that the Board of Metlifecare is open to engaging on any reasonable alternative proposal. We welcome receipt of APVG’s NBIO and intend to canvass shareholders on whether they prefer this alternative,” said Metlifecare chair Kim Ellis.
Ellis, however, said there is no guarantee that both parties will be able to reach an agreement due to “a number of issues” to resolve. With the new offer, Metlife has decided to defer a special meeting of shareholders scheduled for July 10.
Metlifecare, established in 1984, currently owns and operates a portfolio of 25 villages in areas with strong local economies, supportive demographics, and high median house prices, located predominantly in New Zealand’s upper North Island.