Top shareholder Genesis Capital lifts offer for Pacific Smiles

The battle for dental group Pacific Smiles has taken another turn after its largest shareholder, private equity business Genesis Capital, increased its off-market takeover bid.

Pacific Smiles co-founder Alex Abrahams. Picture: Justin Lloyd

The battle for dental group Pacific Smiles has taken another turn with the largest shareholder, private equity firm Genesis Capital, increasing its off-market takeover bid and valuing the company at $303m.

Genesis Capital’s Beam Dental Bidco is offering Pacific Smiles investors $1.90 a share – with investors offered a choice of cash, scrip or a mixture.

The bid is up from its initial indicative proposal of $1.40 a share in December last year, which was rejected.

ASX-listed Pacific Smiles urged shareholders to take no action on the new bid, which would “need to be considered in detail” by the board and its advisers before a formal recommendation was made.

“The board will also take into account feedback from shareholders and the likelihood of success of the offer,” it said.

In April, Crescent Capital-­affiliated National Dental Care lodged a bid of $1.90 a share. This was increased to $2.05 – $1.98 in cash plus a 7c dividend – in late July. On August 8 Pacific Smiles shareholders – despite a recommendation from the board – voted against the takeover bid at a scheme meeting. At the time, an independent expert had assessed Pacific Smile’s valuation at between $1.80 and $2.17 a share.

Sydney-based Genesis Capital has a 19.9 per cent shareholding in Pacific Smiles, which operates 130 dental clinics across Australia.

Earlier this year Australia’s Takeovers Panels ruled that Genesis Capital should not be penalised for disclosure issues relating to its stake in Pacific Smiles.

The panel had considered submissions from several parties, including Crescent Capital, concerning an order restricting Genesis Capital from voting on any Pacific Smiles shares it had a relevant interest in.

Genesis Capital is a private equity firm led by former Crescent Capital executives Michael Caristo and Chris Yoo. The latest offer is subject to a 90 per cent minimum acceptance condition.

Pacific Smiles shares rose 6.3 per cent to $1.865 on Tuesday.

The stock has been on a rollercoaster ride over the past year amid management upheaval.

CEO Andrew Vidler resigned in early September after the Crescent takeover bid was defeated and chair Zita Peach and chief financial officer Matthew Cordingly left in late August.

Mr Caristo described Genesis Capital’s offer as a “compelling proposition for shareholders”.

He said the cash offer price was at a significant 95 per cent premium to the one-month undisturbed volume-weighted average price of Pacific Smiles shares as at December 2023. “It’s consistent with the price recommended by the … board in May 2024 and sits within the independent expert’s fair value range,” he said.

Originally published as Top shareholder Genesis Capital lifts offer for Pacific Smiles