The board of pet care company Greencross Limited is unanimously recommending that shareholders vote in favour of a proposed scheme implementation agreement that will see the 100 per cent of the business acquired by private investment firm TPG.
The scheme would afford shareholders $5.55 per share, with an implied equity value of $675 million; both below the rejected takeover offer made by TPG two years ago.
In 2016, TPG offered the business $6.45 per share, equalling a $736 million offer, which the pet care business turned down; stating it “fundamentally undervalues Greencross”.
However, shares in the company spiked after the announcement jumping from $4.54 a share late last week to $5.40 per share on Monday afternoon.
“In reaching our conclusion that the scheme is in the best interest of shareholders, the board has considered a number of alternatives, including standalone value creation opportunities and alternative proposals from other potentially interested parties,” Greencross chairman Stuart James said in a note to investors.
“Upon assessing the alternatives before it, the Board has unanimously concluded that the scheme is a compelling option which realises attractive value for our shareholders.”
Shareholders are expected to vote on the matter in early 2019, though the date may be subject to change.
Despite falling profits, the business maintains a healthy mix of retail and service-based offerings, as well as a highly engaged customer database with a loyalty program that touches 90 per cent of retail sales.
TPG’s head of Australia and New Zealand Joel Thickins said the investment firm is confident the Greencross business will continue to grow under private ownership.
Source: Inside Retail