Calvary raises offer for Japara Healthcare to $320M as books opened for due diligence

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The Catholic Not For Profit has lifted its takeover bid for the ASX-listed provider from $1.04 to $1.20 – an 18% jump – but with new conditions on the proposal.

As we reported here, Calvary – formerly known as Little Company of Mary Health Care – surprised the market with a $1.04 per share offer – valuing the company at $278 million – on 30 April 2021.

The revised offer – made last Saturday – again proposes the acquisition of 100% of the shares in Japara via a Scheme of Arrangement.

The proposal was conditional on Japara confirming to Calvary that it would be allowed access to undertake due diligence, and:

  • A unanimous Japara Board recommendation and a commitment from all Japara Directors to vote in favour of the transaction (in the absence of a superior proposal and subject to an Independent Expert concluding that the proposed transaction is in the best interests of Japara Shareholders); and 
  • Final Calvary board approval

Japara has agreed that Calvary can undertake the due diligence so that the NFP can develop a binding proposal that can be recommended to shareholders.

Calvary is one of Australia’s largest healthcare and aged care providers with four public hospitals, 11 private hospitals, 14 aged care facilities and 11 retirement villages plus 12,000 staff, while ASX-listed Japara has over 4,000 beds across 51 homes in Victoria, NSW, Queensland, South Australia and Tasmania.

The deal represents a mixed bag for shareholders.

Japara’s shares have dropped more than 50% since the operator listed at $2.70 per share in April 2014, reaching as low as $0.36 in September last year – an 86% fall.

Shareholders who bought in at the low – including Aurrum Aged Care Director David di Pilla – would triple their investment.

But Japara’s largest shareholder, funds manager Moelis, founder Andrew Sudholz and investors who bought in at the peak would lose out.

Japara’s statement to the ASX says the deal is far from being done.

“Shareholders do not need to take any action in relation to the Revised Indicative proposal and are cautioned there is no certainty that the Revised Indicative Proposal will result in a transaction,” it reads.

Regardless, the market did like what it heard. Japara’s share price has climbed from $0.80 to sit at $1.11 prior to the announcement of the renewed offer – today it is sitting at $1.18.

But will shareholders want to cut their losses or will they continue to invest in an uncertain future? And does the Calvary offer represent a bargain price – or an over-valuing of Japara’s portfolio? They are points we will be discussing in the next issue of SATURDAY, in your inbox at 6am on Saturday, 19 June.