The speculation around the listed providers continues to heat up with conglomerate Washington H. Soul Pattinson and Regis co-founder Bryan Dorman making a play for the aged care provider late on Thursday – only to be knocked back yesterday.
Soul Patts and Mr Dorman’s company Ashburn – which owns 27.2% of Regis – offered $1.85 a share, 25% higher than Regis’ closing share price of $1.475 on Thursday – which values the company at $443.65 million.
Like the other listed providers, Regis has had a tough year with its share price falling 40% on the back of COVID and the Aged Care Royal Commission. In June, there were rumours that the provider was looking to sell some of its real estate assets after its half-yearly profits slumped by 50%.
Shareholders presented with two options
Under the offer, existing shareholders would be able to choose cash or shares in a newly incorporated company, allowing them to retain their exposure to Regis in a privately operated business.
Mr Dorman would retain his 27% stake with the remaining 73% to be held by Soul Patts under a scheme of arrangement.
Soul Patts’ Chairman, Rob Millner, said it would look to open talks with the Regis board.
“Given the regulatory uncertainty and funding challenges currently facing the aged care industry, WHSP believes that Regis’ long-term prospects will be best served in a privately owned setting and that WHSP’s long-term investment horizons and access to capital make it and Ashburn logical partners to oversee Regis’ growth and development.”
Regis says offer undervalues company’s future prospects
But early on Friday, Regis told the market it had rejected the proposal, saying that it materially undervalued the company given its medium- and long-term prospects and did not offer value to shareholders.
Their statement notes that Soul Patts had made an earlier initial offer on 30 September with Skip Capital at $1.65 a share which was also rejected for undervaluing the provider.
Regis said this decision was reached after consideration that the Royal Commission is due to hand in its Final Report on 26 February 2021, the Commonwealth foreshadowing “substantial additional funding” in the May Budget and the easing of COVID restrictions improving the financial performance of the sector.
In short, its future is looking up – and potential buyers should be prepared to pay more.
It was certainly good news for Regis’ share price which hits $1.81 – not too far short of the offer.
The question now is: will Soul Patts increase their offer – or wait to see the outcomes of the Royal Commission and the Budget?