Arvida shareholders say yes to takeover offer

Wednesday, 25 September 2024

Shareholders in retirement company Arvida have voted to accept a $1.2 billion takeover offer from a United States private equity firm.

Stonepeak, which manages US$71.2b ($112b) of assets, made an offer to buy all the shares in the NZX listed company at $1.70 per share back in July.

That price was a 65% premium to Arvida's share price at the time.

The Arvida board, which conducted a value recognition programme in May to maximise value for shareholders, was in favour of the offer, and recommended that shareholders should vote for it.

It became clear through the value recognition process that the Stonepeak proposal was superior to the other options the board considered were realistically available to the company, it said.

The offer would enable shareholders to realise 100% of their investment at a material premium to the current share price, and the board believed it was the best way to get value for shareholders.

Institutional shareholders, accounting for about 18% of Arvida shares were supportive of the offer, it said.

Now, shareholders have also voted for the takeover to go ahead at a special meeting on Wednesday.

Before the vote, Arvida chair Anthony Beverley said the company’s share price had been declining since 2021, along with the share price of most companies in the retirement sector.

Going forward the shares were likely to trade at less and that was crucial to the directors’ thinking, he said.

“The directors believe the Stonepeak offer reflects value for Arvida, and mitigates the risks otherwise involved.

“We have not received any other offer, and don’t expect to receive one. That is why we recommend that shareholders vote for the scheme.”

If it proceeded, the shares would be delisted and transferred to Stonepeak, and there would be no opportunity for investors to be involved in Arvida, he said.

Shareholders Association representative Grant Diggle said it was a sad day, especially for a company as well run as Arvida.

“We regard this as like a death in the family but we are supporting the scheme because we believe it’s in the interests of shareholders.”

But it further reduced sharemarket investment opportunities for New Zealanders, who did not have the same opportunities as Australians, he said.

For the offer to proceed, 75% or more of the votes cast in each interest class and more than 50% of the total number of Arvida shares on issue would have to be in favour of it.

The required amount of shareholders did vote for the offer to go ahead, and Beverley said it was pleasing to see shareholders had overwhelmingly supported it.

Shareholders would be paid out around November 13, and no further dividends would be paid, he said.

Arvida’s annual general meeting was held after the vote, and the company’s chief executive, Jeremy Nicoll, presented its financial results for the year to March.

It made a net profit after tax of $139.4m, which was up 69% on the previous comparable period, but the underlying profit of $85.4m, was down 3% due to increased costs.

Revenue for the year grew 11% to $247.2m, from $222m the previous year, while operating EBITDA was up 14%, or $11.6m, to $95.2m, from $83.6m.

Nicoll said business performance in the later part of the financial year started to recover, following a period of challenging property and macroeconomic conditions.

Arvida, which has $4.2b in total assets, was the fourth largest retirement business and aged care provider in the country with 36 villages, he said.

“But continued disruption at Health NZ has hampered things this year, while the government aged care funding model is inadequate, and a clear policy is required.”

Australia had recently announced an overhaul of its aged care funding model to ensure sustainability and the achievement of the outcomes needed as the population aged, he said.

“They are leading the way, and our government should follow them.”