Mystery buyer builds up stake in Metlifecare

A mystery investor has taken a strategic stake in Metlifecare, betting on the failure of a $341 million bid to take full control of the retirement village operator.

The investor has acquired an estimated 2 per cent stake since Monday at prices above the $3.90 a share offered by Australia's FKP Property Group and Macquarie Bank.

The shares closed last night at $3.95, unchanged from Tuesday.

The trades, worth an estimated $7 million, were made through broker UBS, which declined to reveal the buyer's identity.

The investor is betting Metlife's 11 per cent shareholder Fisher Funds will not sell into the offer, eventually forcing FKP and Macquarie to offer more. If Macquarie and FKP do pay up, it would enjoy similar returns.

Fisher Funds yesterday declined to comment.

Some observers believe the investor is a hedge fund, borrowing to pay for the shares.

It could also be other big shareholders such as ING or Tyndall Investment Management. Neither fund discusses their trading positions.

Meanwhile, the independent directors are recommending that investors who have not yet accepted the offer reconsider their options.

Metlife director Michael Stiassny, who has not yet tendered his 250,000 shares, said he was considering what to do.

Those shareholders who have already accepted the deal cannot withdraw their acceptance.

"The offer is open for acceptance until December 3, 2005. Shareholders ... may wish to seek appropriate financial advice," the independent directors said yesterday.

FKP Property Group director Peter Brown said the offer would not be raised.

Macquarie said it was "completely comfortable" with a controlling shareholding in Metlifecare. As part of a wave of consolidation sweeping the sector, it has shown a willingness to own retirement villages through a variety of entities.

At the start of the year, it paid $63.5 million for Eldercare, through one of its global funds.

Meanwhile, the joint venture with FKP also bought Auckland's Private Life Care.

FKP Property Group and Macquarie Bank have secured almost 70 per cent of Metlife shares.

Major shareholders Todd Lifecare and Private Healthcare, which is owned by Metlife founder Cliff Cook and his family, agreed to sell their shares in the middle of October, bringing to an end almost a year of talks.

FKP and Macquarie will retain Cook as a consultant on a $300,000-a-year contract.

They are also interested in talking to Cook about acquiring some of his other assets. Cook said the agreement had given certainty to village residents and minority shareholders.