The nation's only pure-play provider of over 50s rental accommodation on Monday, 8 April issued its Target Statement and Independent Expert’s Report by Lonergan Edwards & Associates to shareholders to show why it considers the offer inadequate.
Eureka Group's Board unanimously concluded Aspen Group's takeover offer "is inadequate, materially undervalues Eureka shares and is not in the best interests of Eureka shareholders."
"Eureka has an attractive future as the only listed pure-play provider of affordable seniors’ rental accommodation in Australia. The Company will remain focused on pursuing opportunities that are aligned with Eureka’s business model to deliver future earnings and net asset growth for all shareholders in FY24 and beyond,” the Board stated.
To vindicate its position, Eureka released its FY24 earnings guidance with an expectation of FY24 Underlying EBITDA (earnings before interest, taxes, depreciation, and amortization) in the range of $15 million to $15.3 million, which is a growth of 19% to 21% over the prior year (FY23: $12.6 million).
It also stated midpoint FY24 underlying earnings per share (EPS) of 3 cents.
"The guidance implies midpoint 2H24 underlying EPS of 1.56 cents which is 8.3% higher than 1H24 underlying EPS of 1.44 cents,” Eureka Group Holdings stated.
"This guidance of 3 cents is also 7.1% higher than the estimate in Aspen Group Holdings Limited’s Bidder’s Statement dated 15 March 2024 relating to its unsolicited, all-scrip takeover offer to acquire all of Eureka’s shares that it does not already own for 0.26 Aspen securities for every one Eureka share."
The guidance includes the positive impact in 2H24 of Eureka's $11 million expansion of its Brassall development in Ipswich, QLD, which was completed in February 2024, and the investment in the Eureka Villages WA Fund, which occurred in December 2023.
"The annualised impact of these items (i.e. assuming they both occurred on 1 July 2023), would result in a pro-forma midpoint FY24 underlying EPS of 3.07 cents which is 9.6% higher than the estimate in Aspen’s Bidder’s Statement,” said Eureka.
Aspen bought 13.7% of Eureka in December 2022. Last month, Aspen increased its stake to 36%, to become Eureka's biggest shareholder.
