8 Apr 2020

Covid-19: Bidder for Metlifecare pulls out

11:36 am on 8 April 2020

Another takeover offer has fallen victim to the Covid-19 pandemic.

The Swedish backed company making a $1.5 billion takeover offer for retirement village operator Metlifecare has pulled out.

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Photo: 123RF

Metlifecare said it received a late night message from the bidder, Asia Pacific Village Group (APVG), that the virus outbreak was a "Material Adverse Change", which would lower the value of Metlifecare's assets, its earnings, and profits.

It said the bidders are also claiming they were not consulted about decisions relating to the government-ordered lockdown.

"Metlifecare is taking legal advice on the APVG correspondence, but its initial view is that the assertions are without substance and that APVG does not have a lawful basis to terminate the SIA (takeover agreement)," the company said in a stock exchange statement.

APVG, which was created by a Swedish based private equity firm, was offering $7 a share for Metlifecare, which is 20 percent by the New Zealand Superannuation Fund.

Metlifecare shares slumped 19 percent to a seven-year low of $3.43 each on the news.

The Metlifecare deal is the fourth big investment deal to fall over in the past two weeks because of the Covid-19 outbreak.

Property firm Augusta Capital's $180m takeover by an Australian based investor, Centuria, was scrapped in late March, while a $150m bid for dental company Abano has also been withdrawn

And shareholders in the Livestock Improvement Corporation [https://www.rnz.co.nz/news/country/413676/pandemic-kills-off-israel-agritech-move voted against a move to buy a $US70m stake in an Israeli dairy farming concern.

In a statement, APVG owners, EQT Infrastructure IV fund said the spread of Covid-19 within New Zealand and the consequences for Metlifecare permitted it to terminate the takeover agreement.

"Those circumstances are [that] Covid-19 has reduced or is reasonably likely to reduce Metlifecare's consolidated net tangible assets by at least $NZ100 million and/or Covid-19 is reasonably likely to reduce Metlifecare's consolidated underlying net profits by at least 10 percent in FY 20, FY21, and/or future years."

It said APVG did not consider that the circumstances were capable of remedy.

"Assuming they are not in fact remedied within 10 business days, APVG intends to terminate the [agreement] within the following five business days."