Grant Diggle of the Auckland branch of the association expressed regret about the takeover by United States private equity business Stonepeak, which shareholders approved.
“This is a sad day, especially for a company as well-run as Arvida. We regard this as like a death in the family but we are supporting the scheme because we believe it’s in the interests of shareholders,” Diggle said.
Australians had more sharemarket investment opportunities than New Zealanders due to the differing sizes of our capital markets, he said.
Arvida chairman Anthony Beverley acknowledged Diggle’s comments.
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The Shareholders’ Association said it had noted an independent valuation of the company indicated that $1.70 did not reflect the underlying intrinsic value. The offer was less than the $2.04 a share implied by the company’s net asset value, it said.
The Arvida board recommended shareholders accept the $1.70 takeover offer, which is 65% above the pre-offer trading price.
Stonepeak manages US$71.2b ($112b) of assets and this afternoon, Arvida said more than 75% of shareholders had voted in favour of the takeover.
Beverley told shareholders in Auckland and online that directors thought Stonepeak’s offer reflected full value for Arvida, given the prospects for the business, the economic outlook and the risks facing Arvida.
Directors unanimously backed the takeover and want shareholders to do the same.
The offer needs Overseas Investment Office and High Court approval.
Beverley said the share price was a key consideration and no superior offer had been received than that from the Americans.
“Since late 2021, our share price has steadily declined, along with most in the sector. Our share price underperformance was a key consideration for directors,” Beverley said.
If the scheme didn’t go ahead, Arvida’s share price would likely fall in the near term, he said.
Arvida is one of New Zealand’s largest aged care providers, owning and operating 35 retirement villages nationally.
Proxy votes were received from 69% of all Arvida shares. Beverley said the votes had been “overwhelmingly” in favour of the takeover: 67% of total shares backed it before the vote.
The takeover needed 50% backing by the number of shareholders for approval. Arvida has 730 million shares on offer. One shareholder asked if he could remain an Arvida shareholder after the takeover but Beverley told him no.
Today’s AGM, held directly after the vote, heard from Beverley, who referred to a subdued outlook for the property market.
Jeremy Nicoll of Arvida Group.
Arvida chief executive Jeremy Nicoll said the company was New Zealand’s fourth-largest aged care retirement business.
Nicoll said the Government wasn’t paying enough for hospital-level care and a 3.2% rise this year was woefully insufficient.
“Something must change to ensure the sector survives long-term and is able to deliver the quality of care expected as we all age. The Australian Government recently announced a significant overhaul of their aged-care funding model with a view to ensuring its sustainability over the long term. They are certainly leading the way, and our Government should be taking note,” Nicoll said.
Some larger sector participants were deferring care development activity until there is more certainty on policy in this area, he said.
One shareholder asked whether dividends would resume but Beverley told him those were suspended, given an unclear market and to preserve capital.
Arvida had agreed it would pay no further dividends once discussions with Stonepeak advanced, “so we had the discretion to provide a dividend but should we do so, it would come off the [takeover] price”, Beverley said.
Asked how staff were reacting, Nicoll said it was always disruptive to have an ownership change but their teams were taking it well.
“It’s just BAU [business as usual], in effect. Ten years down the track, having a change is not a bad thing. I won’t have to wake up and worry about where the share price is headed,” Nicoll said.
Beverley said of the takeover offer: “When you’re trading at $1.05 and someone comes and knocks on your door with $1.70, it tests your metal. We concluded $1.70 was really, really compelling.”
Shareholders are due to be paid out on November 13 in the deal they voted for.
Arvida shares have been trading around $1.66, giving a market capitalisation of $1.2b.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
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