Shareholders vote yes to Metlifecare takeover deal
Metlifecare shareholders have approved the $ 1.27 billion takeover offer for the company, with 148 million votes in favour and just 14 million against.
That announcement followed chairman Kim Ellis telling a meeting in Auckland yesterday that 90.7 per cent of Metlifecare proxy shares were voted in favour of the $ 6- a- share deal and only 8.8 per cent against.
Asia Pacific Village Group, owned by Sweden’s EQT, can now buy all of retirement village operator Metlifecare and has agreement from the NZ Super Fund that it will sell its 19.9 per cent stake — a point which irks Ellis.
An earlier offer from EQT, at $ 7 a share, was withdrawn because of the Covid- 19 pandemic.
Ken Wong, EQT Australia & New Zealand managing director, welcomed yesterday’s result, which he said was “overwhelmingly in favour”.
“EQT looks forward to applying its long- term vision to accelerate Metlifecare’s growth and deliver the highest quality care to its residents.”
Wong also thanked Metlifecare staff for protecting the health and wellbeing of its residents during Covid.
Ellis said the $ 1.27b offer was made on a Sunday afternoon and the board was under pressure to decide whether to put the new offer to shareholders.
“There was very little interest in taking the thing to the contrary of NZ Super’s position,” he said. “I think I used the term a fait accompli . . . I hope that explains the rather awkward position we were put in.”
At the end of the meeting, Ellis asked himself if he had any regrets about how the board had handled the offer: “At all times we sought to put the interests and rights of shareholders first,” he said. “Throughout the past nine months, particularly with a very challenging March to August, we ensured the executive team didn’t lose their focus on the business, which proved very resilient.”
One shareholder said he was unsure how long EQT would keep Metlifecare.
“I know nothing about their intentions,” Ellis said, referring to chief executive Glen Sowry “who’ll be there after we go”.
Sowry said that during recent months there had been a transition committee process between EQT as the new potential owner and the senior management team to ensure a smooth and productive transition of governance and ownership.
“Having been dealing with EQT as the ultimate owners over recent months, those discussions and planning for the transition have been entirely constructive.
“EQT has had significant experience in aged care,” he said.
“They have ambitions for Metlifecare to grow it and invest in it and ensure it continues to improve and be a better company in the future.
“If we don’t serve our residents well, that will be to the detriment of the business and that’s something EQT understands very well,” Sowry said.
A shareholder asked about the potential of the business.
Metlifecare chief financial officer Richard Thomson said the figures in the independent advisers’ report were long- term unit price growth assumptions. Short- term movements would be both positive and negative but a longer- term view was needed.
The housing market had defied Covid gloom, Thomson said.
“Plus we’re transacting at or close to valuation and in some cases above,” he said of retirement village unit sales.
About 400 to 500 real estate transactions were carried out annually by Metlifecare and the market was robust, he said.
A shareholder asked why the board felt the revised scheme terms were a fait accompli.
Ellis said: “In the context of the moment back then, we got a very clear direction from a majority of shareholders that we canvassed that they wanted to vote on the scheme and would vote in favour of it. There was no way at all we could not take the opportunity for shareholders to allow them to make the decision.
“The snag was that the terms had been placed in front of us and it was on a take it or leave it basis, so that put us in a very delicate position that if we had attempted to renegotiate . . . there’s a danger it could slip away.
“Yet we had a majority saying they were happy so we’d be putting at risk an offer that a majority were keen to vote on and vote positively for. So we didn’t want to get presumptuous and felt it was absolutely imperative to get the scheme in front of shareholders,” Ellis said.
“There had to be a majority of shareholders voting on it. As it turned out, a majority did feel comfortable with what had been placed in front of us.”
Director Mark Binns said: “We had no choice about letting the litigation go. We had tried to put forward a proposal that would allow a decision to be made. We had to make a decision whether we accept the package as offered which meant letting go of the litigation rights and offering the shareholders a vote.”
Director Alistair Ryan also said the board had to consider the $ 6 “as a take it or leave it offer”.
“As a director, I didn’t find it a situation where I would reject an offer by voting that way and that opportunity or vote didn’t come to shareholders. So I had to get my head around $ 6. Everyone wanted it to be more but it wasn’t.
“Was $ 6 a price where I could say that price is defendable and something that represents a value for the assets? It’s at the bottom end of the range.
“The alternative was to pursue the $ 7 and go through litigation. That would take two years,” Ryan said.
“The discounted value comes right down to $ 6 or can be below. That would be very disruptive for the company, to have ongoing litigation going on for two years over ownership.
“The $ 6 was a reasonable but low price offer and should come forward for shareholder consideration and I’m voting my shares in favour of the $ 6.”
An online question came from a Highlands Metlifecare resident: “What will the new owner do for older villages in terms of maintenance and repair? Sowry said it was hard to speak on behalf of Asia Pacific, but under the Overseas Investment Office application, which had been approved for the takeover, Asia Pacific had to demonstrate it would invest in the business.
“They have given that commitment which includes long- term maintenance and other activity in some of Metlifecare’s existing villages,” Sowry said. “They realise there’s potential to enhance some of the older villages but what that might look like, it’s too early to say.”
I think I used the term a fait accompli . . . I hope that explains the rather awkward position we were put in. Chairman Kim Ellis