Estia Health receives upgraded offer from Bain Capital

The share price of aged care homes specialist Estia Health (ASX: EHE) leapt by 14% in morning trade on the news of an upgraded acquisition offer from leading international private investment firm Bain Capital.

The revised non-binding and conditional proposal from Bain relates to the acquisition of 100% of the issued capital of Estia Health by way of a scheme of arrangement.

Estia Health shareholders would receive an increased $3.20 per share in cash under Bain’s revised proposal.

Initial proposal unveiled in March

In late March, Estia Health confirmed that it had received an aftermarket confidential, non-binding and indicative takeover proposal from Bain.

Under the terms of that indicative proposal, Estia’s shareholders would be paid $3.00 cash per share.

The initial proposal carried a number of conditions including satisfactory completion of due diligence on an exclusive basis, execution of a binding scheme implementation agreement and a unanimous recommendation from the Estia board.

The company has informed its shareholders that they need not take any action in respect of the revised proposal at this stage.

However, the Estia board has agreed that the revised proposal should progress allowing Bain Capital to undertake further due diligence to enable it to provide a binding proposal.

The revised proposal is conditional on Bain Capital obtaining certain exclusivity rights which has led to Estia entering into a process deed which provides the bidder with the opportunity to conduct an extended due diligence on an exclusive basis.

The process deed also includes a “matching right” regime related to any superior proposal Estia could potentially receive during the exclusivity period.

Dividend payments permitted

Under the upgraded proposal Estia is permitted to pay ordinary dividends of up to $0.12 cash per share.

However, this would not be conditional on a scheme of arrangement proceeding.

Payment of a $0.12 per share fully franked dividend would enable eligible Estia shareholders to receive approximately $0.051 per share in additional benefit from franking credits, depending on their tax circumstances.

Board intentions revealed

If Bain Capital provides a binding proposal consistent with the terms of the revised proposal and subject to entry into a binding scheme implementation deed in a form acceptable to Estia Health, the board has confirmed it intends to unanimously recommend the potential transaction in the absence of a superior proposal and subject to an independent expert assessment.

US-headquartered Bain Capital has approximately US$165 billion (A$247 billion) in assets under management.