Greencross taken over by US private equity giant TPG
Written on the 6 February 2019 by Ben Hall
Greencross (ASX: GXL) shareholders have voted overwhelmingly to accept a full takeover by private investment firm TPG as the veterinary care company faces an increasingly tough competitive environment.
A shareholder vote was held on Wednesday and, ahead of that, it was reported that 98.81 percent of proxy shareholders voted in favour of accepting the scheme arrangement at $5.55 a share with just 0.32 percent voting against the deal.
Greencross chairman Stuart James went into the shareholder meeting with the knowledge that the vote would pass easily after securing the support of Canadian shareholder, Global Alpha Capital Management, who owns 10 percent of the company's shares.
Global Alpha had reportedly wanted $7 a share and it appears that even if they had maintained their opposition to the takeover, it would not have been enough to stop the deal.
The Greencross board had unanimously approved the takeover offer in November at $5.55 per share and at that time it represented a 44.5 per cent premium on the company's weighted average share price in the month leading up to the offer. The offer implies an equity value of $675 million.
The offer is well below a previous takeover made by TPG in 2016 at $6.45 per share, which valued the company at $736 million. At the time, former CEO Martin Nicholas criticised that proposal as "opportunistic" and one which "fundamentally undervalued Greencross".
The company then went on to deliver an 18 per cent increased revenue of $326.7 million at the end of FY16.
Since then, the board has changed its stance and told shareholders the $5.55 a share offer was "a compelling option which realises attractive value for our shareholders."
"As a former investor in Petbarn, supporting the growth of the business from 69 stores to over 298 stores and clinics, we are confident that TPG will continue to support the ongoing success of the business," Greencross chairman Stuart James told investors previously.
TPG is making the investment via two entities, including its Asia fund and growth fund. US-headquartered TPG has more than US$94 billion (AUD$130.7 billion) in assets under management.
Greencross faces a tough competitive environment in its pets and vets retail business from companies like Pet Circle and online retail giant Amazon.
The final result of the meeting was confirmed on Wednesday on the ASX with 99.67% in favour of the deal.
Greencross shares have been trading for most of Wednesday at the offer value of $5.55.
Business News Australia
Author: Ben Hall