Pressure is believed to be mounting on the board of retirement village provider Metlifecare to re-engage with its suitor EQT Infrastructure, which walked away from a $NZ1.5bn deal to buy the company.
EQT offered $NZ7 a share, but announced it would not move forward with the planned acquisition, claiming material adverse changes to the business linked to COVID-19.
After Metlifecare’s board recommended the offer, it is now engaged in legal action to ensure that EQT follows through with its original approach.
However, on the company’s register are hedge funds, which collectively own more than 25 per cent and will soon call for the resignation of the company’s chairman Kim Ellis.
The shareholders apparently sent a letter to Mr Ellis expressing concerns.
He could not be reached when contacted by DataRoom.
The unease at the situation is believed to centre on claims that the board failed to engage with EQT when it came forward with a revised, lower offer, or to disclose the approach publicly.
Some say it was in fact Metlife that put a lower approach to EQT of about $NZ6, which was rejected.
EQT was then interested in engaging at a price closer to the bottom of the independent expert’s valuation, but the board refused to engage at this level.
Independent expert KordaMentha has said that the company is now worth $NZ5.80 to $NZ6.90 a share — slightly below the original $NZ7 bid price.
A shareholder vote is to be held next Friday to determine whether litigation should be taken to ensure that EQT completes the deal at the price agreed last year.
Metlifecare, one of New Zealand’s largest retirement village providers, is listed in Australia as well as across the Tasman.
There were claims the coronavirus pandemic would impact its value by more than $100,000 and its net profit by at least 10 per cent.
The company has construction-related debt worth about $NZ300m but plenty of headroom. It has about $NZ4m of cash on its balance sheet.
It currently has a market value of $NZ1.37bn.
Other shareholders include The New Zealand Superannuation Fund, which also holds about 20 per cent of the stock.
Working for Metlifecare is Jarden, while Goldman Sachs is representing EQT Infrastructure’s interests.
A Metlifecare spokesperson said that the company does not comment on speculation but is aware of its disclosure obligations.
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