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Aged care provider Aveo Group (ASX: AOG) has entered a scheme implementation deed to sell 100 per cent of its shares to a subsidiary of Brookfield Property Group.
The sale is priced at $2.195 per share which values Aveo at $1.3 billion on an equity basis, including the resolution of $700 million worth of company debt.
The board has unanimously recommended that shareholders accept the offer which represents a 28 per cent premium to Aveo's closing price of $1.71 on February 12, the day before it first revealed several bids had been made by parties who were interested in a whole-company transaction.'
Brookfield currently has more than US$365 billion in assets under management and under terms of the scheme, its subsidiary Hydra RL BidCo will acquire all outstanding Aveo securities.
It marks the culmination of a process that began when Aveo enlisted an Independent Board Committee in November 2018 to manage a 'strategic review' of its business.
At the FY18 AGM, then chairman Geoff Grady (pictured) said the decision to launch the review was due to sustainability fears.
"Our security price is trading at a significant discount to net tangible assets," he said.
"We believe this is due to concerns around sustainable sales levels in a broader property market that has softened, and perceived further regulatory risk in the retirement sector."
"The review includes an evaluation of the potential introduction of capital partners into the retirement business."
Grady is now executive director and CEO of the company.
Midway through 2017, Aveo's stock price dropped after Four Corners released a damning report that the aged care giant was financially mistreating its elderly residents.
This sparked a chain of events that took a toll on AOG shares, including two class action lawsuit investigations and related media onslaught.
Two months after Aveo announced its decision to launch a strategic review, the Royal Commission into Aged Care began.
Royal Commission proceedings are still ongoing, with the final hearing in Melbourne slated for 14-18 October 2019.
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