Fertility company Virtus Health (ASX: VRT) has signed up to a revised $707 million bid from UK private equity firm CapVest Partners.
The revised bid, the eighth in a bidding war that began in December, tops the most recent offer by local firm BGH Capital and is $100 million higher than BGH’s initial bid.
Virtus announced on 14 April that it had signed an amending deed to update a previous agreement to CapVest’s revised bid.
In the bid, CapVest retained its alternative scheme of arrangement and takeover offer proposals in lifting its offer to as much as $707.39 million. CapVest increased its scheme of arrangement proposal to $8.15 a share, plus a 12 cents-per-share interim dividend declared by Virtus on 22 February, and its takeover offer proposal to $8.10 per share, also plus the interim dividend.
In addition, CapVest has undertaken not to pay a capital return during the takeover offer period unless the ATO confirms that this will not be treated as an unfranked dividend and to allow Virtus to pay a fully franked special dividend of up to 44 cents per share.
The CapVest revised offer was made conditional on Virtus confirming that it would not provide due diligence access to BGH in respect of its $8 a share takeover offer announced on 6 April.
Announcing the latest CapVest offer on 11 April, Virtus said: “As a result of the superior value inherent in the CapVest revised offer and taking all relevant considerations into account in the interests of Virtus and its shareholders, the Virtus board has unanimously determined that the CapVest revised offer is superior to the BGH takeover bid on the basis that:
“The revised CapVest scheme price represents a 15 cents per share premium to the BGH takeover bid price and around a 59% premium to the undisturbed Virtus share price of $5.21 as at 13 December. [Prior to BGH making its initial $7.10 per share offer].
“The revised CapVest takeover offer price represents a 10 cents per share premium to the BGH takeover bid and around a 58% premium to the undisturbed Virtus share price of $5.21 as at 13 December.”
Virtus said its board unanimously recommended shareholders to vote in favour of the CapVest scheme in the absence of a superior proposal subject to a favourable independent expert report and, if the scheme was not successful, accept the CapVest takeover proposal on the same conditions.
Also on 11 April, the Takeovers Panel announced that, in response to an application from CapVest, it had made interim orders prohibiting BGH from acquiring Virtus shares on market above its bid price, until BGH had made an announcement to the ASX that the bid price was to be increased and the amount of that increase.
CapVest had sought the order claiming BGH had not complied with ASIC Market Integrity Rules in reporting its intention to buy Virtus shares on market above its bid price.
Virtus had announced on 6 April that it had received notice that BGH intended to make an off-market takeover offer to acquire all the shares in the company it did not already hold (BGH holds a 19.9% stake) at $8 a share subject only to no “prescribed occurrences” (outlined in its bidder’s statement) occurring before the end of its offer period, initially set at one month. In other words, it was prepared to make the offer without access to due diligence.
Virtus noted that, under the deed, CapVest had the right to match a competing offer.
On 14 March, Virtus announced it had entered into a binding agreement for CapVest to acquire the company via a scheme of arrangement at $8.25 a share or alternatively via an off-market takeover offer at $8.10 per share. Both offers were to be reduced by dividends or distributions including the 12-cent dividend declared on 22 February.
After it made its initial indicative bid for Virtus late last year, BGH had revealed that it had control over shares representing a 19.99% stake in the company. CapVest quickly topped the BGH bid and gained exclusive due diligence, a privilege which was challenged by BGH with an application to the Takeovers Panel.
BGH claimed that Virtus had granted exclusivity to CapVest without including a ‘fiduciary out’ to allow for an improved offer and had therefore not acted in the best interests of its shareholders. The panel upheld the complaint stating that any agreement between Virtus and CapVest could not exclude a better offer from BGH, but the panel declined to take action on a second complaint lodged by BGH after the parties had each made improved offers.
On 20 January, Virtus announced it had entered into a process deed with CapVest in relation to a non-binding, indicative proposal to acquire all its shares by way of a scheme of arrangement at $7.60 per share, or via an alternative $7.50 a share transaction, such as an off-market takeover bid, that would require acceptance of more than 50% of shares rather than the 75% required under a scheme of arrangement.
While CapVest would require a 75% majority of shares to be voted in its favour under a scheme of arrangement, an off-market takeover offer would require only a simple majority.
Virtus was an investee of Quadrant Private Equity prior to June 2013 when Quadrant fully exited its large majority stake in an IPO. Shares were issued in the IPO at $5.68.
Image: Virtus medical scientists examine images of in vitro embryos.