Greencross Limited’s shares jumped as high as 17% after the company announced that it is set to sell-off 100% of Greencross shares at $675 million.
On Monday, the integrated pet care and vet clinic company Greencross Limited (ASX: GXL) announced that it has entered into a Scheme Implementation Agreement with private investor TPG Capital Asia and TPG Growth to sell 100% of Greencross shares for $5.55 per share.
This comes after the company has rejected the higher bids stating that the offer has "fundamentally undervalued" the company. It includes an offer received from TPG Capital and The Carlyle Group who valued Greencross at $770 million in 2016.
But now ahead of the emerging competition from new entrants specifically in the online space of pet care industry, the company decides to accept $675 million offer, considerably below than the previous bids.
As per the announcement dated 5 November 2018, TPG Capital will pay $5.55 per share to acquire 100% shares in Greencross. This offer price quoted through scheme of arrangement reflects a 34.1% premium to the undisturbed closing price of $4.14 on 9 October 2018 which represents Greencross at an implied equity value of $675 million and enterprise value of $970 million.
In the absence of the better offer and Independent Expert’s Report stating that Scheme is in the best interests of Greencross shareholders, the Board of Directors of the company have recommended GXL shareholders to vote in favor of the scheme. Company told that scheme meeting to obtain the shareholders vote is expected to be held in first quarter of CY2019.
Greencross chairman, Mr. Stuart James stated that Board has considered several alternatives, including standalone value creation opportunities and alternative proposals from other potentially interested parties before entering into the scheme implementation agreement with TPG Capital. He added that upon the thorough evaluation of the exiting alternative offers, the Board has ‘unanimously’ concluded that the Scheme is an attractive option for Greencross’ shareholders.
Under the scheme, TPG has also given an equity alternative through which Greencross shareholders can have an indirect interest in the business of acquirer, Vermont Aus Holdco Pty Ltd, an entity owned by TPG. That means shareholder have an option to accept all cash consideration at offer price of $5.55 per share or go with mixed consideration option, subject to certain conditions. Under the mix option GXL’s shareholders will be entitled to receive the cash consideration for 50% of their holding and remaining 50% will discharged in form of Class B shares in Vermont Aus Holdco Pty Ltd.
TPG's Head of Australia and New Zealand, Mr. Joel Thickins stated that under private ownership of Greencross, its business, brands and products will continue to grow and provide world-class services to the increasing number of pet lovers in Australia and New Zealand.
However, the finalization of the deal still remains uncertain as the scheme is subject to limited conditions. But being all the conditions satisfied, the company intends to implement the scheme in first half of CY2019. With this announcement, GXL share price surged up 17.731% to trade at $5.345 on 5 November 2018 (1:39 PM AEST).
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