TPG has come back to InvoCare with a higher takeover offer that has won conditional board support

The once withdrawn takeover bid for funeral play InvoCare from TPG looks to have risen from the dead with a new, higher offer winning over conditional board support.

TPG has come back to InvoCare with a higher takeover offer that has won conditional board support and values that funeral services company at $1.9bn. Picture, John Gass

Private equity firm TPG Capital’s previously pulled takeover bid for funeral company InvoCare has risen from the dead, with it coming back with a revised conditional and non-binding $1.9bn offer for the region’s largest funeral services operator.

The $13 a share revised offer has immediately won conditional support from the InvoCare board, who have signalled that if due diligence then delivers a binding proposal, it will be recommended to shareholders.

After walking away and withdrawing its offer in late April of $12.65 cash per share for InvoCare — the owner of funeral brands such as Le Pine, White Lady Funerals and Simplicity Funerals — the private equity investor has come back with a revised, slightly higher offer.

In a statement to the ASX on Monday, InvoCare said the new bid from TPG of $13 a share was inclusive of a fully franked special dividend of up to approximately 60c a share.

For InvoCare shareholders that can utilise franking credits, this represents implied aggregate value of up to approximately $13.25 per share, and values the largest funeral services company in Australia and New Zealand at just over $1.91bn.

InvoCare said it has agreed to provide TPG the opportunity to undertake due diligence on an exclusive basis to deliver a binding proposal and that if the proposal becomes a binding transaction, the InvoCare board unanimously intends to recommend it.

The takeover offer is via a scheme of arrangement.

Shares in InvoCare rallied more than 12 per cent on the back of the revised offer from TPG to close at $12.43 on the ASX.

The revised $13 a share proposal represents a 45.3 premium to InvoCare’s closing share price of $8.95 per share in early March before TPG made its first takeover offer and a 39.2 per cent premium to InvoCare’s trading volume-weighted average price of $9.34 per share following its fiscal 2022 results release in late February.

Under the new offer, InvoCare is also permitted to pay a fully franked special dividend of a cash amount, currently expected to be approximately 60c per share. The amount of any special dividend payable will depend upon confirmation of the quantum of franking credits available at the time of transaction implementation.

InvoCare intends to apply to the ATO for a Class Ruling and seek any other administrative guidance from the ATO which it considers appropriate, on the treatment of the scheme consideration and the Special Dividend in the hands of shareholders, the company said on Monday.

Shares in InvoCare have been struggling for years and traded under $9 before the bid was made as poor financial results and a swing to a loss looks to have attracted private equity firms to run the ruler over the funeral business.

InvoCare swung to a loss of $1.8m last year from a $80m profit in 2021, as volatile equity markets, rising costs and weaker market share impacted its profitability and triggered an 11 per cent slump in its share price on the day.

The funeral company, which also operates a pet cremations business, pledged to investors to accelerate its strategies under its five-year plan, but investors might prefer cash in hand now rather than those promises of future profits and a turnaround in InvoCare’s results.