© Reuters.
By Rishav Chatterjee
(Reuters) -Australia’s InvoCare Ltd said on Wednesday it has agreed to a lower takeover offer from U.S. private-equity firm TPG Global, valuing the funeral service provider at A$1.8 billion ($1.18 billion) following exclusive due diligence.
TPG tabled an all-cash offer of A$12.70 per share, lower than its previous A$13 bid for the New South Wales-based company.
The offer of A$12.70 per share represents a 42% premium to the company’s closing price on March 6, before the initial offer was placed.
InvoCare’s board unanimously recommended its shareholders to vote in favour of the revised proposal.
Since May 15, when TPG Global hiked its offer to A$13.00 per share, InvoCare shares have risen 6% as of last close to A$11.760.
Shares of Invocare have been on a trading halt since Monday.
The deal includes a franked special dividend of up to 60 Australian cents per share that the board said represents total implied value of about A$12.96 apiece.
“Invocare is an excellent opportunity as an acquisition for TPG,” said Brad Smoling, managing director at Smoling Stockbroking.
The aging demographics in Australia and the surprising increase in mortality in recent years is very positive for Invocare, he added.
Invocare also flagged a challenging macro environment, citing that softer market volumes and inflationary pressures have impacted its margins.
The company expects to report earnings before interest, tax, depreciation, and amortization (EBITDA) for the first half in the range of A$61 million to A$63 million, compared with A$68.5 million a year ago.
TPG, which holds a 19.2% stake in InvoCare, had initially approached the target in March with a A$12.65-per-share offer.
TPG did not immediately respond to a Reuters’ request for comment.
In May, InvoCare had received the A$13 apiece bid from TPG and agreed to a five-week due diligence on an exclusive basis to deliver a binding offer.
($1 = 1.5298 Australian dollars)