InvoCare board backs TPG’s new takeover offer

The board of funeral specialist InvoCare (ASX: IVC) has unanimously recommended its shareholders accept a new takeover offer from US-based equity fund TPG Capital.

The company’s directors have also notified that they intend to vote all of the InvoCare shares in which they have a relevant interest in favour of the scheme.

TPG’s latest cash consideration bid represents an implied equity value of $1.8 billion and enterprise value of $2.2 billion.

Under the revised scheme of arrangement, InvoCare shareholders will receive $12.70 per share in cash, inclusive of a fully franked special dividend of up to $0.60 per InvoCare share.

TPG has informed InvoCare that it expects to fund the cash consideration offer through equity committed by certain funds managed or advised by TPG, and third-party financing.

Takeover bid in best interests of shareholders

InvoCare’s chairman, Bart Vogel said the board is unanimous in its view that the transaction is in the best interests of the company’s shareholders.

“The transaction represents a significant premium of 42% to InvoCare’s undisturbed closing share price. The board notes that the Cash Consideration payable under the Scheme delivers certainty of value to InvoCare shareholders and unanimously recommends that shareholders vote in favour of the Scheme.”

TPG’s cash consideration offer also provides a 36% premium to InvoCare’s trading VWAP of $9.34 per share following its FY22 results release on 27 February 2023 and ending on 6 March 2023 and a 29% premium to InvoCare’s one-month VWAP of $9.82 per share on 6 March 2023.

Scrip offer not popular

As an alternative to receiving all cash consideration, TPG has also offered InvoCare shareholders the option to elect to receive one of several scrip consideration options that would enable InvoCare shareholders to retain an interest in the InvoCare business after the proposed scheme has been implemented.

The scrip consideration options will only be available to InvoCare shareholders if the minimum scrip threshold is satisfied.

The InvoCare board has not recommended the scrip consideration offer.

Scheme go-ahead has a number of conditions

The implementation of the scheme has a number of conditions still to be met.

These include: InvoCare shareholder approval; approval by the New South Wales Supreme Court; approval by the Australian Foreign Investment Review Board and New Zealand Overseas Investment Office; and an independent expert concluding (and continuing to conclude) that the Scheme is in the best interests of the InvoCare shareholders.

Next steps

A scheme booklet for the offer is currently expected to be sent to InvoCare shareholders in September 2023.

If the scheme is approved by InvoCare shareholders and the other conditions precedent are satisfied or waived, the scheme is expected to be implemented by November 2023.

InvoCare, headquartered in Sydney, is a leading provider of funeral services in Australia, New Zealand, and Singapore, and operates private memorial parks and crematoria in Australia and New Zealand. It is also a leading provider of pet cremation services in Australia.

The company is being advised by Gresham, Goldman Sachs and Clayton Utz.