Metlifecare board backs takeover bid

The New Zealand Super Fund has backed the sale of retirement village operator Metlifecare to a Swedish-based fund manager.

Metlifecare’s board has recommended shareholders accept a revised takeover bid of $7 per share from Asia Pacific Village Group, an entity created by Sweden’s EQT Fund Management. A trading halt which went on Metlifecare shares before Christmas has been lifted, with shares opening at $6.38.

The NZ Super Fund, which holds 19.895 per cent, told the NZX yesterday it would support the deal if it went ahead.

EQT’s latest offer is a 50c improvement on its previous offer on December 19 and Metlifecare chairman Kim Ellis said it had the support of a number of institutional shareholders.

Both the board and executives who were shareholders had decided to back the buyout, subject to valuation by an independent adviser and in the absence of a better offer. Metlifecare has previously said two other bidders had shown interest. Ellis said the board had made it clear for some time that the company was undervalued by the market.

The price of $7 is a 38 per cent premium on the stock’s closing price prior to the first offer on December 19. Ellis said EQT’s values aligned with the company’s. ‘‘We are confident that they will continue to focus on ensuring Metlifecare’s village and care operations have customers at the core, as well as growing the business through development of new villages.’’

Metlifecare was founded in 1984 by businessman Cliff Cook and has been on the NZX since the early 1990s but it became stronger after merging with Vision Senior Living and the private life care assets of Retirement Villages New Zealand in 2012.

It currently has a portfolio of 28 villages finished or under construction, predominantly in the upper North Island, including Gulf Rise on Auckland’s Hibiscus Coast. However, in recent times the slowing Auckland property market and rising construction costs have been hurting the company, which saw profits fall 68 per cent to $39.2 million in the year to June. Its assets rose $53.9m in value over the 12 months to June 2019, compared with a spectacular $132.7m in the previous year.

Ken Wong, managing director at EQT Partners, said his company was committed to continuing to provide the ‘‘exceptional care to New Zealanders which Metlifecare is known for’’.

Shareholders must still vote on the transaction, and a special meeting will be called in April 2020; when an independent report will be ready. It is also subject to High Court approval and Overseas Investment Office consent.