Arvida (NZX:ARV): Why did the Company acquire Arena Living?

Highlights

• Arvida Group completed the acquisition of Arena Living for roughly $345 million on Tuesday.
• The portfolio of Arena Living includes 6 retirement villages in Auckland and Tauranga.
• The acquisition was funded through Placement, Rights offer and bank debt. 

Arvida Group Limited (NZX:ARV) is amongst the largest aged care providers in New Zealand. The Group confirmed on Tuesday that the agreement to obtain all Arena Living Holdings Limited shares had been completed.

The portfolio of Arena Living includes 6 retirement villages situated on prime sites in Auckland and Tauranga. These villages are Mayfair Village, Parklane Village, Peninsula Club, Ocean Shores Village, Knightsbridge Village and Mt Eden Gardens.

The Group had entered into a deal to procure all shares of Arena Living on 15 October 2021 for nearly $345 million.

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Jeremy Nicoll, Arvida’s Chief Executive, stated that villages of Arena Living were large scale and well-established and were placed across a combined land of 48 hectares. He noted that it was not easy to replicate a portfolio of this size in these core locations.

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Arvida has the potential to examine a variety of future development and care choices to enhance and increase resident and village amenities along with the spread-out character of these properties, as per Mr. Jeremy.

Acquisition funding

Costs of acquisition and transaction were funded via new equity and debt. The Group undertook a $155-million placement at $1.96 per share, $175 million Rights offer at $1.85 per share and $23 million of bank debt.

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The Arena Living acquisition received strong support from existing shareholders, and new investors in the Placement and the Rights offers. Both Offers were fully underwritten by Forsyth Barr Group Limited and Jarden Partners Limited.

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The take-up rate of nearly 75% in the Rights offer was a strong approval by shareholders of the acquisition, as per Arvida. In addition, qualified shareholders were also allotted 90.3% of their applications for extra new shares under the shortfall bookbuild.

On 16 November, ARV ended the trading session at $1.97, down 0.51% from its previous close.

Bottom Line

The acquisition is likely to add $32-34 million of underlying profit in FY22 on a pro forma basis. Arvida now looks forward to welcome 1400 residents to ARV.

Future prospects include moving forward with the refurbishment of Mt Eden Village into a boutique retirement community, incorporating care through retrofitting care suites, introducing Arvida's home care service, etc.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)