Shares in InvoCare – the owner of White Lady Funerals, Simplicity Funerals and Le Pine – jumped 37% on Tuesday in early trading after a $1.8bn buyout proposal from US private equity group TPG.
TPG told the ASX it had bought an 17.8% interest in the company, and then InvoCare revealed it had received an indicative buyout proposal from TPG pitched at $12.65 a share, a 40% premium to Monday’s closing price of $8.95 a share.
The shares eased a tough to end the day up 35% at $12.08, well under the pitch price. The day’s peak of $12.45 was the highest the shares have been since April 2020, at the start of the pandemic.
InvoCare said it is supporting the proposal and had started an assessment of the offer.
InvoCare said shareholders do not have to take any action in relation to TPG’s proposal at this stage as there is no certainty that the Indicative Proposal will result in a transaction.
InvoCare said it has appointed Gresham Advisory Partners as financial adviser and Clayton Utz as legal adviser.
The company reported last month that it swung to an annual loss of $1.8 million, from a profit of $80.2 million in 2021.
Operating EBIT for the year ended to December rose 9% to $84.6 million.
But that was wiped out and more by global equity market volatility which “caused a net unrealised mark-to-market loss on the revaluation of pre-paid funds under management assets to be booked, driving a reported loss of $1.8 million for the year.”
The reported loss didn’t stop a final dividend being declared.
Directors approved a fully franked final dividend of 11.0 cents per share which took the full-year dividends to 24.5 cents per share, up 17% on 2021.
Operating revenue increased 12% to $588.5 million in the year, the company said in the annual results last month.
“The Group saw growth in the key value drivers of funeral case volume (up 8%) and funeral case average (up 5%) which combined, supported double- digit growth in operating revenue from our Australian, New Zealand and Singapore funeral businesses.
“This was supplemented by strong burial and cremation volumes and solid growth in memorialisation sales in the Australian Cemeteries & Crematoria business, as well as strong revenue contribution from the Australian Pet Cremations business.”
Now, TPG wants to load more debt and squeeze every drop of revenue and profits out of the InvoCare business.
