Summary

  • In December 2019, MET made an announcement about scheme implementation agreement (or SIA) under which EQT, which is a European investment company, would be acquiring all Metlifecare’s shares for the consideration amounting to $7.00 per share.
  • In April 2020, MET received a notice to terminate SIA entered with APVG. However, Board of MET rejected the notice to terminate.
  • Later, in July, MET entered into a new SIA and APVG offered $6 a share for the acquisition of all of MET’s shares. Notably, the parties have also decided to discontinue all the litigation as well as settle all the disputes which were associated to original SIA.

Metlifecare Limited (NZX: METis a leading NZ owner and operator of retirement villages, providing rewarding lifestyles and outstanding care to more than 5,600 kiwis. Talking about the financial performance for FY 2020, the company posted robust operating performance, and achieved underlying profit before tax amounting to $93.8 million, which was marginally below the last year's record.

The company stated that result was supported by an uplift in the operating revenue, which rose by 8% to $134 million, because of continued care growth as well as higher deferred management fees. It was also mentioned that robust net operating cash flows were utilised towards investing in the property improvements as well as development projects across the year.

Metlifecare entered into a Scheme Implementation Agreement (SIA) under which EQT, which is a European investment company, would acquire all Metlifecare’s shares for $7.00 per share.

The transaction was supposed to be implemented by a scheme of arrangement, a court-supervised process where a meeting of shareholders occurs to vote on the transaction. The scheme was subject to conditions like High Court approval, shareholder approval and Overseas Investment Office consent.

In March, Metlifecare noted some risky comment about SIA but confirmed that the SIA contains limited termination events. Later during the month, APVG advised MET that it is monitoring COVID-19 pandemic situation in NZ.

It was also mentioned that APVG possesses termination rights under SIA, including termination rights in the event of a “Material Adverse Change” (MAC).

However, in the release dated April 8, 2020, it was mentioned that MET received notice of an intention to terminate the SIA with Asia Pacific Village Group Limited (APVG) in ~10 business days.

ALSO READ: Metlifecare Secures Substantial Shareholder Support for Court Action Against APVG’s SIA Termination

In the release dated April 28, 2020, MET stated that it has received a notice to terminate SIA entered with APVG. The Board of MET has rejected the notice to terminate from Asia Pacific Village Group Limited as invalid as well as reiterated the belief, based on legal advice, that there is no lawful basis for Asia Pacific Village Group Limited to terminate scheme implementation agreement.

 

New SIA with EQT infrastructure             

As per the release dated July 10, 2020, MET entered into a new SIA where APVG agreed to buy all the shares of Metlifecare at $6 per share. However, a split occurred between chairman of MET as well as rest of the board over $1.3 billion planned takeover.

Image Source: © Kalkine Group 2020; Data Source: MET Updates

EQT offered $6 a share, at the lower end of independent report which valued MET in the range of $5.80-$6.90 per share. MET's chair, Kim Ellis, was disappointed and was of the view that the scheme price does not adequately reflects the underlying value of Metlifecare Shares.

In the release dated September 3, 2020, MET has confirmed that it has been granted initial orders from High Court to seek shareholder approval of scheme of arrangement with APVG. Notably, scheme consideration was NZ$6.00 a share. 

Shareholders of MET Voted in Favour of the Takeover

As per the release dated October 2, 2020, shareholders in MET have voted in favour of scheme of arrangement under which all the shares in the company would be acquired by Asia Pacific Village Group Limited. In the same release, it was stated that if the scheme receives the final approvals, there are anticipations that the scheme would be implemented as well as shareholders would be paid NZ$6 per share on or around October 29, 2020.

Investor Attempts To Obstruct The Takeover 

On 8 October, Metlifecare revealed that a shareholder filed a Notice of Opposition to the High Court application for the Scheme of Arrangement with APVG.

MET stated that it is considering the notice and would be providing further updates on the scheme process as are suitable. The company also added that shareholders do not need to take any action at this point. Metlifecare is now preparing for High Court hearing scheduled for October 15.

MET has been advised that Takeovers Panel has deferred the decision on whether to issue a ‘no objection’ statement with regards to Scheme of Arrangement with APVG until October 19, 2020. Notably, the deferral has been caused by lodgement of the Notice of Opposition to the Scheme by one shareholder.

On October 13, 2020, the share price of MET ended the session at NZ$5.950 per share.

(Important Note: Currency is reported in NZD, unless stated otherwise).

 

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