A London-based private equity firm has overbid local PE group BGH Capital in a new buyout offer for IVF group Virtus Health.
CapVest, a new name in PE funds, has indicated an offer of $7.60 a share for Virtus, or a total value of $650 million, more than $40 million above the BGH price of $US607.3 million or $7.10 a share.
Including debt held by Virtus, the offer is valued at around $850 million.
At the same time as announcing the indicative offer on Thursday, the Virtus board rejected the BGH offer, saying:
“The Virtus Board has now completed its assessment of the proposal received from BGH, as set out in Virtus’ ASX announcement on 14 December 2021, to acquire all of Virtus’ shares via recommended scheme of arrangement at $7.10 cash per share (the “BGH Proposal”).
Following careful consideration of both the CapVest Proposal and BGH Proposal, including advice from its financial and legal advisers, the Virtus Board has determined that the CapVest proposal is attractive for shareholders in the context of a change of control transaction and superior to the BGH Proposal.”
That means to pursue its offer, BGH will have to top the $7.60 a share offer from CapVest.
CapVest reportedly is seeking due diligence to firm up the indicative bid and Virtus Health is considering the request.
BGH though has a 19.9% stake in Virtus held via shares and options built as part of its indicative offer in early December.
CapVest wants to buy 100% of Virtus via a scheme of arrangement but is also prepared to offer a partial bid with a minimum acceptance level of 50.1%.
That would enable it to buy control and avoid BGH’s potential blocking stake in compulsory acquisition or a scheme of arrangement.
For a private equity investor, though, partial control would be unstable as it would not be able to fully control Virtus’ cash flows and load it up with the usual pile of debt.
CapVest is an international, London-head quartered investment firm founded in 1999 with current over €5 billion of investments in healthcare and related industries. it says it has made a close study of the global fertility market and sees scope for consolidation.
Virtus Health shares went into a trading halt on Thursday morning.
