Virtus given trading halt as CapVest revises takeover offer

UK-based CapVest is revising its offer for local IVF provider Virtus, following a ‘circuit breaker’ bid from BGH Capital.

Virtus Health has received seven competing takeover offers in all as BGH Capital and CapVest slug it out over the company. Picture: Virtus Health

Australia’s biggest IVF provider Virtus has plunged into a trading halt, as a bidding war for the company intensifies.

London-based private equity firm CapVest has told Virtus’ board it intends to lob another offer for the company, following a ‘circuit breaker’ bid from Australian rival BGH Capital.

“CapVest intends to submit a revised proposal to Virtus but no details of the terms of that revised proposal have been provided at this time. Accordingly, Virtus considers a trading halt to be appropriate to prevent trading in its securities taking place in an uninformed market,” said Virtus company secretary Ava Bentley.

It follows BGH sweetening its offer to $8 cash a share – or $684m – on Wednesday in an off-market takeover, which seeks to go around the IVF provider’s board.

Frustrated by constantly being rebuffed in favour of CapVest, BGH has ditched a takeover by scheme of arrangement, appealing directly to shareholders’ hip pockets.

“Given the Virtus board’s unwillingness on multiple occasions to engage with us regarding our proposals to undertake due diligence with a view to agreeing a scheme of arrangement, we believe the only viable option to acquire 100 per cent of the shares in Virtus is to make an offer directly to shareholders via this off-market bid,” BGH said in its bidder’s statement.

The off-market takeover proposal is a move BGH hopes will act as a circuit breaker. It believes its offer is superior to CapVest’s off-market offer of $8.10 a share, given that includes a permitted capital return of $2.67.

While the Australian Tax Office is yet to provide guidance on the takeover, it is understood there is a risk that $1.40-$1.50 a share of that permitted capital return will be an unfranked dividend. This would reduce Capvest’s bid to an equivalent of $7.55 to $7.76 a share.

CapVest has offered a high price – $8.25, less the 12c dividend Virtus declared on February 22 – via a scheme of arrangement. Despite being endorsed by the board, that looks unlikely to proceed, given BGH has amassed a 20 per cent stake in Virtus and says it will use that holding to reject any CapVest bid.

Virtus has requested the trading halt until Monday or when CapVest lobs its revised offer.