Shares in Virtus Health have soared more than 32 per cent after the healthcare group told the market it has received a $607m buyout proposal from private equity firm BGH Capital.
Shares were up $1.67 to $6.88 in late morning trading on the ASX on Tuesday following the $7.10 a share bid and a raid on the stock on Monday night that saw BGH get its foot on a 19.99 per cent interest.
BGH amassed a 9.99 per cent holding in the business at $7.10 per share through the aftermarket raid handled by UBS.
It also entered into a total return swap with UBS that has yet to settle in respect to 8.6 million shares, representing a stake of 10 per cent.
The offer is cash and includes a cash and scrip alternative to major fertility specialist shareholders and certain other affiliated shareholders to enable them to continue their investment in Virtus.
The deal is conditional on due diligence and financing.
Working with Virtus is Jefferies and Gilbert + Tobin.
Shares in Virtus on Monday had closed 14c lower at $5.21.
The company’s market value on Monday was at $458m, after shares had been falling since it traded at more than $7.30 in August – the highest level in five years.
For the year to June, Virtus generated $43.8m of net profit compared to $900,000 for the previous corresponding period.
The offer comes after Virtus agreed a deal to buy Healius’ Adora fertility business this year for $45m only for the acquisition to face opposition from the Australian Competition and Consumer Commission.
BGH Capital’s rival Pacific Equity Partners floated Virtus in 2013 in a deal that gave it a market value of about $500m.
DataRoom tipped on Monday that BGH Capital may be the suitor as it remains a keen investor in the healthcare space.
It is founded by former TPG Capital executives including Ben Gray and Simon Harle and former Macquarie Capital boss Robin Bishop.
BGH is believed to have been assessing numerous opportunities in the healthcare arena and has already made acquisitions of medical centres and dental care businesses.
IVF groups are said to have outperformed other areas of the market amid the global pandemic and private equity groups typically gravitate towards the healthcare sector as they cash in on the ageing population trend.
However, the listed rival to Virtus, the $366m Monash IVF, has been outperforming Virtus and taking market share.
Virtus counts Jefferies as its defence adviser.
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