Monash IVF Group (ASX: MVF) has rejected as “opportunistic” a proposed $311.7 million takeover offer from a consortium that includes Washington H. Soul Pattinson (ASX: SOL) which has moved to take advantage of the fertility services group’s depressed share price.
The consortium, comprising Genesis Capital Investment Management and Soul Patts entity WHSP Holdings, want to acquire all of the shares in Monash IVF for 80c per share, which compares with the company’s closing price of 61c last Friday.
However, the market appears to think this may be just the starting price after pushing Monash IVF shares to a six-month high of 86c this morning.
Monash IVF says the unsolicited, conditional and non- binding indicative proposal from the consortium is priced at a multiple of 7.7 times the company’s underlying FY25 EBITDA which the company notes is at a “substantial discount to comparable IVF transactions in the Australian market”.
Monash IVF shares have been depressed for the latter part of this year after the company revealed two clinical bungles that led to separate incidents of an embryo mix-up in Brisbane and Melbourne.
An independent report in August found human error and IT system limitations were the causes of the failures, but the impact has been felt on the group’s share price since the first mix-up was revealed in April.
“The Monash board, in consultation with its advisers, has formed the view the proposal in its current form is opportunistic in its timing and materially undervalues the company,” says Monash IVF chairman Richard Davis.
The Soul Patts consortium already has a 19.6 per cent stake in Monash IVF.
The consortium has sought an exclusive due diligence period from Monash IVF to firm up its offer.
The Monash IVF board says it plans to act in the interests of shareholders and will only progress a takeover proposal if it “represents compelling value for Monash IVF shareholders”.
Monash IVF posted revenue growth of 6.7 per cent to $217.9 million in FY25, which led to underlying EBITDA rising 5.6 per cent to $66.3 million.
However, underlying NPAT of $27.4 million was down by 8.1 per cent – a result that was in line with a downgraded target issued in May this year in the wake of the company revealing the first embryo incident.
Monash IVF at the time cited softer market conditions in March that had worsened in April as reasons for the profit downgrade.
Shares in Monash IVF were trading 39 per cent higher at 85c at 11.55am (AEDT).
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