A small Metlifecare shareholder fighting the $1.3b takeover cheered by big shareholder

Thursday, 8 October 2020

An illustration of Orion Point Retirement Village in Hobsonville, Auckland, planned by retirement village operator Metlifecare.

A small shareholder in large retirement village operator Metlifecare fighting the $1.3 billion overseas takeover of the company is being cheered on by a big shareholder also opposing it.

The retail shareholder has lodged a notice of opposition in the High Court to “a scheme of arrangement” that will give effect to the $1.3b takeover of the village operator by APVG, owned by large Swedish investor EQT Infrastructure.

The shareholder has a small parcel of shares in Metlifecare and has made a complaint about disclosure of information to shareholders and the valuation of Metlifecare.

Salt Funds Management director Matthew Goodson said “I wholeheartedly agree with their intentions.”

*Metlifecare launches legal action to force completion of a $1.4 billion takeover

*Metlifecare gets new offer from Swedish suitor

*Metlifecare comes to an agreement with EQT to buy its shares for $6 a share

APVG is offering shareholders $6 a share. It is the second and a lower offer from APVG for Metlifecare. The first at $7 a share was terminated in April this year.

At a virtual special meeting last week 90.7 per cent of the votes cast backed the scheme. However, there was vocal opposition and questions about the valuation of the company.

“But I don’t know what precedent there would be particularly given that the other box has been ticked of an independent report finding the bid being within the fair value range.” Goodson said.

An independent report has valued Metlifecare shares between $5.80 and $6.90 with the mid-point $6.36.

Goodson said Salt disagreed with the fair value report. “We thought it was under- priced.”

Metlifecare chairman Kim Ellis voted against the $6 a share takeover at a virtual special meeting last week.

“Given there’s been an independent report …. unless there is some egregious error that can be pointed to in the independent report that the directors (of Metlifecare) relied on then it would seem that unfortunately the boxes have been ticked.”

Metlifecare said it was continuing to prepare for the High Court hearing scheduled for Thursday, October 15, at which final orders for the scheme would be sought.

It was considering the notice and would provide further market updates on the scheme process as were appropriate. The deadline for objections to the scheme is 5pm tomorrow, October 9.

Metlifecare owns and operates 25 villages in the North Island, home to about 5500 residents.

APVG’s first offer at $7 a share was terminated by APVG in April arguing that Covid-19 had reduced the value of the company.

Metlifecare started legal action against APVG arguing the termination was invalid, but in July APVG came back with the $6 offer.

The second offer split the board with Metlifecare chairman Kim Ellis rejecting it but a majority of other directors recommended that shareholders accept it.

The Takeovers Panel chief executive Andrew Hudson said the notice of opposition involved a complaint about disclosure to shareholders.

The panel had to decide if the disclosure to shareholders met the panel’s guidelines. If it did, the panel issued a letter of no objection or vice versa.

The panel regulates New Zealand’s takeovers market and enforces its Takeovers Code.

But Hudson said ultimately it was the High Court which had broader jurisdiction that made the final decision on the scheme of arrangement.

The High Court considers several matters, including whether the scheme meets various statutory provisions, that it has been fairly put to shareholders with all the information reasonably needed to vote on it and that it is generally fair and equitable.