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Following an exodus of key executives that followed a failed $327 million takeover attempt from National Dental Care (NDC) last month, Pacific Smiles (ASX: PSQ) is back in the chair under bright lights as a substantial shareholder launches a fresh tilt at ownership under a different name.
Beam Dental Bidco, which lists Genesis Capital founders Dr Michael Caristo and Chris Yoo as directors, has made an off-market takeover offer for Pacific Smiles at $1.90 per share, representing a valuation of $303 million.
This is the same level NDC first offered in April, but is just one alternative offered by Beam alongside direct shares in its ultimate holding company Beam Dental Holdings (Holdco), or a mix of 47.5c cash and 0.75 shares in Holdco for each PSQ share held.
Caristo and Yoo's Genesis Capital, which snapped up the Totally Smiles assets of troubled former listed company Smiles Inclusive in 2021, has been fighting tooth and nail to wrest control of Pacific Smiles since first offering $1.40 per share in December last year - a 17 per cent premium at the time.
Their affiliates' 19.9 per cent shareholding in Pacific Smiles tipped the scales against the company accepting NDC's offer.
The majority of shareholders by number (81.4 per cent) were in favour of the proposal, but the pushback from Genesis meant votes for the NDC fell short of the 75 per cent required to get over the line, as the total share of votes reached just 63.31 per cent.
Pacific Smiles has faced a leadership vacuum since then with chair Zita Peach leaving the company, followed by chief financial officer Matthew Cordingley, and CEO Andrew Vidler.
Caristo emphasises this dramatic change in circumstances for Pacific Smiles since NDC’s failed to gain the required support from shareholders in August.
“Following the failure of the previous scheme process in August, Pacific Smiles has faced considerable disruption in its leadership, with the resignation of its chair, CFO and CEO in quick succession,” says Caristo.
“We believe our offer provides certainty, speed, and attractive value to all shareholders of Pacific Smiles and we encourage shareholders to consider the stability, value and premium this offer presents.”
Genesis-affiliated Beam notes that the cash offer "provides you certainty of value and removes the risks inherent in your Pacific Smiles investment, including the uncertainty associated with Pacific Smiles securing a new CEO and a new CFO and recent changes to the composition of the Pacific Smiles board".
Beam claims its offer price falls within the range of values determined to be "fair" by an independent expert appointed in relation to the NDC scheme, and adds that the option to participate in a scrip or mixed scrip alternative offer gives shareholders an "opportunity to retain an indirect investment in Pacific Smiles alongside an experienced healthcare investor".
The Pacific Smiles board is yet to respond to the offer at the time of publication.
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