Aveo Group (ASX: AOG) is an ASX listed company from real estate sector that aims to provide the retirement community with care and respect. The company owns, operates and manages the retirement community across the Australian region. It has a large community base of 13,000 residents in 93 retirement communities.
Strategic review update
Recently there has been a rumour about the company, on the its potential buyout. The rumour might have surfaced yesterday (30th April 2019) when the stock shot up by more than 10%, when the broader markets were negative. The trading volumes were also quite high with more than 3.5 million shares being traded compared to the average 20 days volume of 1.3 million.
Post the surge in the stock price, when the stock was trading around A$2.13, ASX placed a pause on the trading of the shares (around 2: 56 PM on 30th April 2019). This pause was requested by the company stating the reason for an imminent release on an announcement. The stock of the company didn’t trade for the entire day after the pause.
Post 4:00 PM yesterday (30 April 2019), the company released an update regarding a strategic view process which was earlier announced on 15th August 2018. The trading pause was lifted today (1st May 2019) after the release of the announcement. The objective of the strategic review last year was to close the value gap between the company’s listed securities and the underlying value of its properties for the retirement community.
On 30th November 2018, the company announced the establishment of an independent Board Committee (IBC). The purpose of IBC is to appraise and respond to the parties, who are interested as part of the strategic review and with this, first phase of the process was started.
The further update on it followed on 13th February 2019, in which the company mentioned that several indicative bids, non-binding in nature came from the parties who were interested in a complete buyout of the company. The second phase of the process commenced in late February 2019, wherein the company had invited the shortlisted preferred parties.
Currently, the due diligence by the parties is going on, and the company advises that there is no surety that an offer will be accepted by the company.
Mr Walter McDonald, who is the chairman of IBC stated that IBC is focusing on acting in the interest of all the stakeholders of the company, by continuing to review process with the aim to close the value gap between the company’s listed securities and the underlying value of its properties for the retirement community.
Financial result updates for 1HFY19
The 1HFY19 results highlights are as mentioned below:
- Free cash flow generation has been expected to be weighted to Q4 FY19, due to the timing of the settlement of non-retirement lots among other factors.
- The net assets of the company were noted at 2.25 million, statutory loss was recorded at 44.7 million and statutory EPS was at 7.7 cps.
- In HY19 Non-Retirement projects had generated a net cash inflow of $7 million.
The stock of the company last traded at A$2.08, down by 2.347% compared to the previous closing of (as on 1st May 2019).
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