CapVest raises stakes for IVF service provider Virtus Health

Virtus is Australia’s largest IVF provider and it had first granted exclusive due diligence to CapVest, which has assets under management worth at least $7.85bn. Picture: iStock

Virtus Health suitor CapVest was expected on Wednesday night to be lifting its offer to buy Virtus Health beyond BGH Capital’s latest takeover bid it tabled, valuing the IVF services provider at more than $684m.

BGH lifted its bid to $8 per share, excluding the 12c per share interim dividend payment on April 14, amounting to $684m.

It changed the structure from a scheme of arrangement, where shareholders vote on the deal, to a takeover bid where it plans to gain control by snapping up more shares to take its interest to beyond 19.99 per cent.

As Virtus told the market on Wednesday, it would assess the BGH proposal, adding that CapVest had matching rights under its agreed deal last month to buy the business for $8.10 per share by way of a takeover bid or $8.25 through a shareholder vote.

Both offers include the 12c per share interim dividend and a 44c per share special dividend.

Virtus shares closed at $8.15.

BGH’s bid on Wednesday was the seventh offer for the business since a bidding war broke out for the group. It started in December, when BGH offered $7.10 a share and secured a 10 per cent stake in the business that it later lifted to 19.99 per cent.

CapVest came forward with a $7.60 per share approach in January. CapVest’s last scheme offer is a 58 per cent premium to the undisturbed Virtus share price on December 13.

IVF services have been in demand in the past two years amid the global pandemic, but market experts believe groups such as Virtus are interesting to suitors given that they are no longer seen as a discretionary service but more like social infrastructure.

BGH’s earlier offer for the business was $7.65 per share.

It is working with investment bank UBS, while Virtus is advised by Jefferies Australia.

BGH’s offer of $8 per share is on the table for six weeks, yet some believe shareholders will not sell stock to BGH until they know the next move of CapVest.

Virtus is Australia’s largest IVF provider and it had first granted exclusive due diligence to CapVest, which has assets under management worth at least $7.85bn. It entered an agreement with the company on March 14 to buy the business.

For the scheme to be approved, 75 per cent of the votes cast on the resolution at the meeting and more than 50 per cent in number of Virtus shareholders must vote for the resolution, so BGH is counting on having enough shares to block its transaction in a vote.

CapVest, founded 22 years ago, is a London-based private equity firm with several healthcare investments, including leading pharmaceutical company Next Pharma and nuclear medicine firm Curium.

Virtus has said it would apply to the ATO surrounding the tax treatment of a 44c per share special dividend payment, which would be deducted from the $8.25 per share offer.