TPG Global bids for InvoCare, Xero culls workforce and Myer posts record half sales

Private equity firm TPG Global has taken advantage of beleaguered funeral services company InvoCare’s (ASX: IVC) lacklustre FY2022 results, with a non-binding cash takeover offer valuing it at $12.64 per share.

Under the non-binding indicative offer, which was made on Tuesday, TPG is proposing to give InvoCare shareholders $12.65 cash for each share held. This offer gives InvoCare an equity value of $1.82 billion.

The offer also represents a 41% premium to InvoCare’s closing price on Monday of $8.95.

InvoCare’s board is assessing the offer and advised shareholders to take no action at this stage.

US-based TPG has US$135 billion (A$205 billion) of assets under management and has already secured an 17.8% interest in InvoCare via physical ownership and derivatives.

Last week, InvoCare announced a $1.8 million loss for FY2022, which was attributed to challenging conditions.

Xero culls workforce to reduce costs

On Thursday, global SaaS business platform service provider Xero (ASX: XRO) announced a program to “reduce costs and drive discipline growth”, which included culling its workforce by 700-800.

The program will see Xero restructure the business and pare up to 800 roles across its global workforce.

Xero chief executive officer Sukhinder Singh Cassidy said the changes will enable Xero to streamline and simplify the organisation and set it up for the next growth phase.

The headcount reductions are expected to boost Xero’s operating profitability.

Ms Singh Cassidy said the workforce cull was a “difficult but necessary step”.

Myer posts record half

Despite inflationary pressures, retail giant Myer (ASX: MYR) has posted a record half year result (H1 FY2023), with net profit after tax rocketing 101% to $65 million – the highest it’s been since H1 FY2014.

Underpinning the record half were sales rising 24.2% to almost $1.9 billion.

The company’s net cash position was also boosted by $50 million to close the period at $267 million and prompting an interim full franked dividend of $0.08 per share.

Myer chief executive officer John King said the record result provides a “strong foundation for future growth”.

Mesoblast moves lead candidate closer to market

Mesoblast (ASX: MSB) is a step closer to bringing its lead candidate remestemcel-L to market for treating a life-threatening complication of bone marrow transplant after the United States Food and Drug Administration (FDA) accepted a resubmission as a complete response.

The company revealed on Wednesday the FDA had accepted its biologics licence application resubmission for remestemcel-L in treating children with steroid-refractory acute graft versus host disease (SR-aGVHD) – which is a serious complication of an allogeneic bone marrow transplant.

Bone marrow transplants are given to children to treat blood cancers and other conditions. SR-aGVHD occurs in about 50% of patients with this type of transplant and has a very high mortality rate, as well as significant hospital stays.

In Mesoblast’s clinical trials, remestemcel-L significantly boosted the survival rate in high-risk children with SR-aGVHD.

If approved, remestemcel-L will be the first off-the-shelf cellular medicine to treat the condition in children under 12 in the US.

The FDA expects to make a decision by 2 August.

Major banks pass on RBA’s interest rate hike

Interest rates are up further 0.25% following the Reserve Bank of Australia’s (RBA’s) monthly meeting on Tuesday, which resulted in its ninth consecutive rise and placed the official cash rate at 3.6%.

All four of Australia’s major banks officially announced on Thursday they were passing on the full 0.25% increase to various loan and savings products.

National Australia Bank (ASX: NAB) stated it was passing on the full increase to its variable home loan interest rate, as well as its saver products.

For an owner occupier paying the principal and interest with a NAB base variable home loan, the interest rate is now 6.7%.

The 0.25% increase to ANZ (ASX: ANZ) home loan products is expected to cost an owner occupier paying interest and principal an extra $66 per month. This is based on a variable home loan rate with a mortgage of $450,000.

ANZ also passed on the increase to its savings products.

Westpac’s (ASX: WBC) customers were also all informed of the full 0.25% increase to home loans and several deposit products.

A standard Westpac occupier, variable principal and interest loan now has a rate of 8.08%.

Meanwhile, a Commonwealth Bank (ASX: CBA) variable owner occupier home loan now has an interest rate of 7.8% for a standard variable rate without wealth package.

All four banks acknowledged the financial pressures of rising rates and living costs were having on their customers.

RBA Governor Philip Lowe said the bank “remains resolute” in its determination to return inflation to its 2-3% target range, with global inflation remaining “very high”.

“It will be some time before inflation is back to target rates.”

He added the outlook for the global economy remains subdued, with below average growth expected in the coming few years.