NZ village operator Metlifecare not accepting cancellation of $1.5B takeover deal due to COVID-19

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In December European private equity fund EQT offered $7 a share to purchase the listed Metlifecare, with 25 retirement villages, pending due diligence. The Board accepted the offer.

But four weeks ago, EQT announced it was pulling out of the deal as stating that COVID-19 had created ‘material changes’, specifically that Metlifecare’s net tangible assets had dropped by $200 million and underlying profit is likely to drop by more than 10% for each of the next three years.

Metlifecare has appointed lawyers and barristers to fight the cancellation, responding in a statement:

“The Metlifecare board has rejected the notice to terminate from APVG as entirely invalid and reiterates its belief, based on legal advice, that there is no lawful basis for APVG to terminate the agreement.”

Metlifecare Chair Kim Ellis says: “The fundamental assumptions that APVG uses to justify its notice to terminate are simply wrong. There has been no breach of the material adverse change metrics and such breaches, if they were to occur, would be covered in either case by specific exceptions under the [agreement].”

A Metlifecare representative told Law360 that the company could either choose to cancel the contract and seek damages, or “continue with the contract and require the defaulting partly to perform its obligations.”