Regis Chairman Graham Hodges (pictured above) has offered more detail to shareholders on why its board rejected the provider two takeover bids led by conglomerate Washington H. Soul Pattinson – as media reported that Regis is looking to separate its real estate assets from its care business.
As we reported here, Soul Patts and Regis co-founder Bryan Dorman – who owns a 27% stake in the company – made a $1.85 a share offer on 19 November, only to be knocked back the next day by Regis’ board who said the offer undervalued the company.
An earlier $1.65 a share offer by Soul Pattinson with Skip Capital, an investment company owned by Atlassian co-founder Scott Farquhar, on 30 September that was not disclosed to the market was also rejected as “inadequate”.
Each offer was to be implemented by a scheme of arrangement between the company and its shareholders.
Regis and other listed providers well-placed to benefit from post-pandemic conditions
In the letter, Mr Hodges states that as the impact of COVID declines, Regis is well-placed to benefit from “a return to more favourable operating conditions”.
“Accordingly, there are clear pathways to improved profitability for Regis and the other leading operators in the sector,” he said.
The Chairman labelled the offers “opportunistic” given the Royal Commission into Aged Care is due to report on 26 February 2021 with substantial Government funding and reform to follow.
Mr Hodges also noted Regis’ portfolio which includes around 7,100 beds.
“The replacement value for this high-quality asset portfolio is substantial,” he stated.
The Board committee added that Mr Dorman – under his commitment deed with Soul Patts – would take shares in the unlisted acquisition vehicle, not the cash offer.
“The Board Committee is always open to considering proposals that offer compelling value for all Regis shareholders, however, the propels received to date were inadequate and did not justify further consideration.”
Mr Hodges would appear to be on the money – Regis’ share price hit $1.86 yesterday, above the offer made by Soul Patts and Mr Dorman.
Speculation about separate real estate platform
The letter comes as The Australian’s DataRoom section reported on speculation that Regis is looking to spin off its real estate platform in an effort to deter other investors which was also rumoured back in June.
In its latest annual report, Regis’ property, plant and equipment were valued at $1.1 billion, but it also holds around $1.2 billion in RADs.
The paper says that Regis declined to comment on the speculation, but sources linked to the provider say there was no definitive plan to sell or demerge its real estates.
Regis has 65 aged care homes with over 1,600 aged care beds added to its 7,100-strong portfolio since the company listed in 2014.