Pacific Smiles management will start making presentations about the company to Genesis Capital on Friday in the hope of extracting a higher offer from the suitor.
Management, led by recently appointed chief executive Andrew Vidler, will be highlighting the value drivers of the Australian-listed dental care chain, which rejected a $1.40 per share bid by Genesis Capital in December.
Crescent Capital, which owns rival National Dental Care, continues to assess whether to launch its own bid, according to sources, although whether it comes forward with a competing offer remains unclear.
Sector consolidation remains in its infancy, according to sources in the industry, and Crescent may take the view merging Pacific Smiles with its own operation creates a larger business which would generate a better return when it comes time to sell out.
BGH Capital also owns dental care provider Abano Healthcare but is not thought to be looking to acquire Pacific Smiles.
One of the major operators is Bupa Dental, which was said to be seeking to offload some surgeries last year.
The big unknown is what Pacific Smiles founder Alex Abrahams, who holds 12.6 per cent of the business and tried to spill the board due to poor performance almost two years ago, thinks is a fair price for Pacific Smiles and at what point he would sell.
Holding a large stake is HBF Health, with 10.3 per cent, which is understood to have bought in at around $2.50.
Genesis Capital — a private equity firm headed by former Crescent Capital and Bain Capital executives — came forward with its offer by way of a scheme of arrangement in December, and the price was rejected by the company’s board.
Pacific Smiles, which operates over 120 dental centres nationally with over 800 dentists, has offered limited due diligence to see if Genesis Capital can put forward a higher price.
It offered an update on earnings guidance in December and expects underlying earnings before interest, tax, depreciation and amortisation to fall between $26m and $28m for the 2024 financial year.
Abrahams founded Pacific Smiles with Alison Hughes almost 20 years ago and the pair reaped almost $100m when it was floated in 2014, with a $200m market value at $1.30 per share.
Today its share price is $1.42 per share and the group is worth about $230m.
Selling out while Genesis Capital was amassing a stake were fund managers Spheria and Pinnacle, which each held about 5 per cent.
Pacific Smiles is advised by Greenhill & Co, while Jarden is working with Genesis Capital.
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