The board of senior and disability accommodation provider Eureka Group (ASX: EGH) has deemed the recent takeover bid from Aspen Group (ASX: APZ) "inadequate", noting it has not received any contact from the suitor since the proposal was announced valuing the target at $166 million.
It is a valuation that would depend on Aspen eventually finding parity between its share price and audited net asset value of $2.01 per share for its own securities - a value that is almost 20 per cent higher than the current value of APZ shares if they were to be sold on the market today.
In an announcement to the ASX, Eureka noted that based on current share market pricing the scrip-based offer would value the target at 43.6 cents per share (cps), or $139.18 million.
Eureka shares have actually traded above that level since 11 January and currently sit at 46cps.
The suitor has indicated it will not be issuing a bidder's statement until Aspen's financial results to December 2023 are released. This means a more detailed proposal isn't likely until later this month.
Eureka's board has noted that without a formal offer or bidder's statement, it is not in a position to provide a recommendation, but it is clearly not enthused by what has been put on the table so far.
"In the interim, based on its initial assessment of the proposed bid, the Eureka board considers the current offer inadequate and that it undervalues Eureka, as the implied bid price of 43.6 cents per Eureka share represents either a discount or no meaningful premium over Eureka’s share price at any time in the past 12 months," the company said.
"The all-scrip proposed bid proposes a merger ratio of 0.26 Aspen securities per Eureka share, with the Implied Bid Price representing a 5.3 per cent discount to Eureka’s closing price of 46.0 cents per Eureka share as at 8 February 2024.
"The Eureka board believes that the company has an attractive future as the only listed pure-play provider of affordable seniors’ rental accommodation in Australia, with a resilient revenue stream underpinned by inflation-indexed Government payments, and it will continue to pursue opportunities that are aligned with Eureka’s business model to deliver future earnings and net asset growth for all shareholders."
The Gold Coast-based Eureka Group is described as the only pure-play ASX-listed provider of affordable seniors’ rental accommodation in Australia. It manages almost 2,900 units in 52 villages nationally, including the recent acquisition of six seniors’ rental villages in Western Australia for $44 million from Ingenia Communities Group (ASX: INA).
Aspen, which is headquartered in Sydney, has a portfolio of 5,000 dwellings across residential communities, retirement villages and holiday parks.
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