Ben Gray’s BGH Capital sweetens offer for Virtus Health after Takeovers Panel victory

Three years after losing Healthscope to Brookfield, BGH is determined to secure Australia’s biggest IVF provider Virtus Health.

BGH and London’s CapVest are slugging it out for Australia’s biggest IVF provider Virtus Health. Picture: Virtus Health

BGH Capital has sweetened its offer for Australia’s biggest IVF provider, Virtus Health, as it seeks to edge out rival bidder CapVest.

Fresh from its win at the Takeovers Panel – which ruled an exclusivity arrangement between Virtus and CapVest was anti-competitive – BGH lifted its offer from $7.10 to $7.65 a share.

The revised offer does not include the 12c a share dividend Virtus declared last week.

BGH says it will use its 10 per cent holding in Virtus – which it plans to lift to 20 per cent via a return swap deal with UBS – to vote against any CapVest bid. Virtus shares jumped 2.8 per cent to $7.45 on Monday. This compares with a 0.7 per cent gain across the broader sharemarket.

Virtus’ board said it was yet to evaluate the revised proposal. It comes after it granted exclusive due diligence to CapVest – which has more than €5bn ($7.85bn) in assets under management – after it made a cash offer of $650m – or $7.60 a share – last month.

BGH took the company to the Takeovers Panel, taking umbrage at the exclusivity period Virtus granted CapVest to complete due diligence as well as the $4m break fee, claiming it was uncompetitive.

The panel agreed, saying the agreement was “likely to inhibit the acquisition of control over voting shares in Virtus taking place in an efficient, competitive and informed market”.

BGH has been keen to invest in health, vying for Healthscope in 2019. But it lost to Canadian investment manager Brookfield, which bought Australia’s second biggest private hospital operator for $4.4bn in June that year.

BGH is also looking to bulk up Virtus via acquisitions, most likely in Singapore and Ireland, where it already operates clinics.

While CapVest has proposed to acquire 100 per cent of Virtus, it has also said it is willing to pursue alternative arrangements.