Gaming to begin for Metlife stake

Let the high-stakes poker begin.

An information memorandum is expected next week for would-be takeover bidders for Metlifecare, the retirement village operator with a market capitalisation of $311 million.

Indicative bids could come before the end of next month.

Tipped as possible bidders are property group FKP; retirement facility developer Primelife and its shareholder, investment bank Babcock & Brown; and private equity investor Pacific Equity Partners. All are from Australia.

It is likely other private equity investors will also have a look.

Metlifecare founder Cliff Cook has put his 25 per cent stake on the block and under a "drag-along" agreement can also offer the 35 per cent stake held by Todd Capital, a part of the Todd family empire.

The element of poker-playing is in Todd's pre-emptive right - dating back to a defensive agreement between the shareholders in 2000 - to buy Cook's shares at the bidder's price.

In other words: Todd could be a buyer or a seller.

Typically, the company is shielding its hand - staying silent on the sales process and its own intentions.

At yesterday's closing price, the 60 per cent block is worth $186.6 million, but under takeover rules the buyer would have to make the same offer to other investors - such as 13 per cent shareholder Fisher Funds.

The Metlifecare board met yesterday as part of preparing to respond to bids.

Chairman Peter Fitzsimmons would not comment directly on issues such as bidders' access to due diligence - a topic of market rumour and speculation - but said the board was "very cognisant of the interests of minority shareholders".

A translation might be: no one will try to block a good bid.

The board is Fitzsimmons, Michael Stiassny, Cook, two Todd representatives - Robert Bryden and Brett Sutton - and Hylton Legrice, whom business people associate with Cook.

Goldman Sachs JBWere is running the sales process after earlier, less formal efforts by David Belcher, of Clavell Capital, to sound out possible buyers came to nothing.

Metlifecare's share price spiked last month on speculation of a takeover and yesterday hit a fresh high of $3.60 on tiny trading volumes.

A five-year "standstill" agreement under which Cook and Todd agreed not to buy or sell more shares - a device intended to block then-investor Eric Watson from bulking up his stake - has just expired.

If either Cook or Todd want to sell out, the other party has first right of refusal.

If one party does not take up its pre-emptive right to buy the other's stake, the party selling can drag its partner along for a sale of their combined stakes to a third party.

On the other hand, if one party decides to sell, the other can insist its stake be included.