Estia Health to be acquired by Bain Capital in $838m deal

Private equity group Bain Capital has made an $838 million takeover bid for aged care provider Estia Health (ASX: EHE) via a scheme of implementation agreement.

The deal implies an enterprise value for Estia of approximately $959 million.

If it is approved at a scheme meeting in November, Estia shareholders stand to receive $3.20 per share, which represents a 50% premium to the company’s closing share price of $2.14 on 21 March — two days before Bain lodged its first non-binding and indicative takeover offer priced at $3.00 per share.

In June, Bain returned with a better offer priced at $0.20 per share higher.

Estia’s board subsequently allowed Bain the opportunity to conduct due diligence on an exclusive basis to enable it to provide a binding proposal.

Estia is permitted to pay fully franked dividends of up to $0.12 per share on or before the scheme implementation date, which would enable eligible shareholders to receive up to $0.05 per share in added benefit from franking credits.

Vote in favour

Estia chair Dr Gary Weiss said the board had “unanimously recommended” shareholders vote in favour of the takeover.

“We are pleased that Bain has recognised Estia’s value as a leading Australian aged care operator with a strong reputation for person-centred care… we are confident as to the outlook for the business and we recognise that the scheme allows shareholders to realise certain cash value now at an attractive premium,” he said.

“We have considered various matters in coming to our recommendation, including the intrinsic value of Estia under a range of scenarios and the price at which its shares may trade over the medium term in the absence of the scheme… we believe the proposed transaction is a good outcome for shareholders and our stakeholders more broadly.”

Strong endorsement

Estia chief executive officer Sean Bilton echoed Dr Weiss’ sentiments.

“Bain’s interest in Estia is a strong endorsement of our strategy to build a market-leading aged care provider focused on creating high-quality outcomes for our residents and families and an attractive and supportive environment for our employees,” he said.

“We look forward to a partnership that will continue to deliver our core purpose, which is to enrich and celebrate life together.”

Largest aged care operator

Estia is one of Australia’s largest aged care operators, having more than 6500 resident places at 73 homes across Victoria, South Australia, New South Wales and Queensland.

The company employs around 8000 staff members and aims to be on the front-foot in an industry set to experience further consolidation.

Bain’s acquisition of Estia increases its focus on Australia where its prized asset is currently Virgin Australia Airlines, which it bought during the pandemic and which is currently preparing for a $1 billion listing on the ASX in November.

Once the Estia transaction is complete, rival group Regis Healthcare (ASX: REG) will be the last remaining aged care provider on the ASX.