Fertility fight heats up as BGH makes cash offer for Virtus
Australian private equity firm BGH Capital is refusing to give up its chase for fertility operator Virtus, offering to start buying shares at $8 each from today.
The off-market takeover bid for Virtus is the latest development in a long-running battle between BGH and UK-based investor CapVest, with investor interest in the IVF sector heightened after a boom in Australian treatments in light of the pandemic.
BGH made the first bid for the company last year, starting at $7.10 a share, with Virtus later granting due diligence to CapVest for shares at $7.60 each. BGH has gone to the Takeovers Panel twice throughout the bidding war, arguing that dealings between CapVest and Virtus were not facilitating a competitive bidding process.
Last month Virtus entered into a binding implementation deed with CapVest, for shares at $8.25 each, less any dividends paid out by the company.
This deal requires 75 per cent of shareholder votes for approval, however. BGH, which owns 19.99 per cent of Virtus stock, has pledged to vote against any deal for a CapVest takeover.
On Wednesday BGH made a fresh play to engage with the Virtus board by lobbing an off-market takeover bid for shares at $8 each. The firm is ready to buy up stock it does not already own from this week, and the offer is not subject to any minimum acceptance requirements.
“Accepting the offer provides Virtus shareholders with a simple and attractive cash exit from their investment in Virtus with certainty regarding the tax implications,” BGH said in a statement filed with the ASX.
The CapVest offer of $8.25 is an increase of 55 per cent on the value of shares in mid-December 2020, before BGH made its first bid. The proposal will not go to a shareholder vote until June, however, and it is not yet clear whether it would garner enough votes to pass.
It is not yet clear how any dividend components would be taxed, with Virtus seeking a class ruling from the Australian Tax Office about how franking credits and offsets would be applied.
“The offer provides Virtus shareholders with an opportunity to divest as much of their shareholding in Virtus as they deem appropriate, in an orderly manner and without the need to pay brokerage fees, and with the opportunity to receive certain value,” BGH said in a statement.
Besides BGH, other major shareholders in the company include Yarra Capital Management and Paradice Investment Management. These investors have been contacted for comment on the new offer.
Shares in Virtus ticked upwards at the open and were sitting 0.6 per cent higher to $8.12 at 10:45am.
CapVest has been contacted for comment.
More to come
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Source: Thanks smh.com