Metlifecare, developing Auckland's Gulf Rise, is a potential takeover target. Photo / Supplied
Metlifecare, developing Auckland's Gulf Rise, is a potential takeover target. Photo / Supplied
Shareholders and institutional investors are anticipating an announcement from Metlifecare early next week after it dropped Wednesday's bombshell that it was a potential takeover target.
The suitor is thought to be an overseas private equity business, possibly from Australia, looking to take advantage of the company, which analysts say hasbeen trading at a discount for some time.
Investors expect the activity surrounding the $1.2 billion business to go one of two ways: either independent directors consider the offer serious and outline further steps, or they will regard any possible indicative price as too low and reject any possible deal and future discussions.
In a statement on Wednesday, Metlifecare said the "highly conditional, non-binding preliminary expression of interest" was from a credible third party. However, the price proposed was "below the board's expectations on value for the company".
Kim Ellis chairs Metlifecare's board, whose independent directors are HLC's Chris Aiken, former Fletcher Construction boss and ex-Meridian Energy chief executive Mark Binns, former SkyCity Entertainment Group chief financial officer Alistair Ryan and former Vector chief customer officer Rod Snodgrass.
Mark Binns, a Metlifecare independent director. Photo / Richard Robinson
Non-executive directors are Carolyn Steele and Dr Noeline Whitehead.
The board has a high degree of property expertise, enabling directors to bring experience to the many projects it has on and Metlifecare's direction.
The company listed total assets of $3.5b in its FY19 investor presentation. It said it had a 97 per cent occupancy, its first Gulf Rise village residents shifted in August and had new developments at Papamoa Beach, Greenwich Gardens, Crestwood, Botany, Pohutakawa Landing at Beachlands, Orion Point and Edgewater.
Metlifecare declared $131m total revenue for the year to June 30, 2019, up on 2018's $114m. Net after-tax profit dropped from $122m in 2018 to $39m in the latest period, but due largely to lower revaluation rises.
The company has listed new villages as being in design, consenting or construction phase. It forecast it would deliver 80 new units in its half-year in its 2020 financial year.
Metlifecare is one of New Zealand's largest retirement stocks and widely held.
Chris Aiken, a Metlifecare independent director. Photo / Michael Craig
If the board considers the deal is a serious one, the company could outline a calendar or schedule.
That could mean it says who the suitor is, announces that an independent appraisal will be commissioned to give shareholders full information about the offer and the pros and cons and say when an extraordinary general meeting would be held to vote on the deal.
That meeting is unlikely to be until next year, given the volume of work which could be involved. However, if the independent directors rejected the offer, it would not necessarily mean the takeover was off the table because the suitor could take further steps to get a larger shareholding in the business.
Craig Tyson of ANZ. Photo / Dean Purcell
Craig Tyson, head of Australasian listed property at the ANZ, which has a 12.1 per cent stake in Metlifecare, was reluctant to talk much.
"We see Metlifecare as undervalued and we are encouraged by the share buyback and we would, at the right price, be prepared to sell our stock. But it has to be at the right price," Tyson stressed.
Metlifecare was trading at $5.08 on Tuesday but shot to $5.80 at the close of trade yesterday, on the back of Wednesday's surprise.
One source said the suitor was unlikely to be Ryman Healthcare or Summerset because both those NZX-listed businesses had indicated they would not buy another village operator but planned expansion organically within their own structures.
Glen Sowry, chief executive of Metlifecare, was ranked eighth out of 16 people heading listed businesses involved in property in New Zealand. That was the Herald's property power list, published on November 8.
Metlifecare has a $30m share buyback scheme underway. It has 25 villages where more than 5000 people live.
