Weekend Herald

Shareholde­rs vote yes to Metlifecar­e takeover deal

- Anne Gibson

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An earlier offer from EQT, at $ 7 a share, was withdrawn because of the Covid- 19 pandemic.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

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