BGH Group ups Virtus Health takeover bid to $653m

After successfully preventing rival suitor CapVest from entering a formal deal to acquire Virtus Health (ASX: VRT) before 11 March, BGH Capital has upped the ante in its attempt to take over the Sydney-headquartered fertility multinational.

On 20 January the Virtus board revealed its intentions to recommend a $649 million takeover bid from CapVest at $7.60 per share, representing a solid premium to BGH's earlier offer of $7.10 per share.

Melbourne-based BGH demonstrated its seriousness from the get-go by securing a 9.99 per cent stake in Virtus, and around three weeks after CapVest entered the ring the original suitor then doubled that shareholding to almost 20 per cent.

BGH took umbrage with the rival bid and in response sought a declaration of unacceptable circumstances from the Australian Government's Takeovers Panel, which was successful with orders given that Virtus and CapVest could not enter an agreement to effect the latter's proposal until 11 March.

The order also forced Virtus and CapVest to amend a process deed clarifying how they would operate if the target received a takeover proposal, as has happened today with BGH making a slightly higher bid of $7.65 per share.

However, what BGH is proposing goes beyond strictly monetary terms, with the suitor and substantial shareholder hoping the potential for current investors to remain on the register could turn their votes around.

"BGH has noted that major fertility specialist shareholders and certain other affiliated shareholders (the “Doctor Shareholders”) may wish to continue their exposure to Virtus, and that they propose to provide a cash and scrip alternative to the Doctor Shareholders to enable them to do so," Virtus said in today's release.

"BGH intends to fund the acquisition through a combination of equity and debt financing. Equity financing will come from BGH Fund I, and BGH advises that they have received highly confident debt financing letters from a number of institutions to support a binding proposal."

The Virtus board is yet to evaluate the revised proposal, and also released the following statement from BGH:

"BGH will vote all Virtus shares that it owns or controls at the relevant time against any CapVest proposal to acquire Virtus by way of scheme of arrangement, and BGH will not accept into any takeover offer from CapVest with respect to all Virtus shares that it owns or controls at the relevant time," BGH stated.

Virtus is one of the world's top five assisted reproductive services companies with market-leading positions in Australia, Ireland and Denmark, as well as a growing presence in Singapore and the UK.

Shares in VRT are up 2.76 per cent to $7.45 per share at 3.56pm AEDT.