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Veterinary care company Greencross (ASX: GXL) has entered a scheme of implementation agreement (SIA) to sell all shares to a TPG Capital subsidiary for an enterprise value of $970 million.
The proposed deal of $5.55 per share represents a 44.5 per cent premium on Greencross' weighted average share price in the month leading up to when acquisition rumours started circulating on 9 October.
The agreement has been reached with Vermont Aus Pty Ltd, a subsidiary of TPG Capital Asia and TPG Growth, and still requires an independent expert's report before it goes to a shareholder vote.
The SIA includes an implied equity value of $675 million, while the enterprise value also includes net debt of $268.2 million.
To be approved Animates NZ Holdings Limited would also need to give written consent for the change of control of Greencross, while in Australia the deal also needs to get the green light from the Foreign Investment Review Board (FIRB).
Greencross is still reviewing whether to pay a fully-franked dividend of $0.21 on or shortly before the implementation date, which would send the premium up to 46.9 per cent.
"In reaching our conclusion that the Scheme is in the best interests of shareholders, the Board has considered a number of alternatives, including standalone value creation opportunities and alternative proposals from other potentially interested parties," says Greencross chairman Stuart James.
"Upon assessing the alternatives before it, the Board has unanimously concluded that the Scheme is a compelling option which realises attractive value for our shareholders."
TPG's head of Australia and New Zealand, Joel Thickens, says the group is pleased to have reached unanimous agreement with the Greencross board on the proposal.
"Under private ownership the Greencross business, brands and products will continue to grow and provide world-class services to the increasing number of pet lovers in Australia and New Zealand," says Thickens.
US-headquartered TPG has more than US$94 billion (AUD$130.7 billion) in assets under management.
"As a former investor in Petbarn, supporting the growth of the business from 69 stores to over 298 stores and clinics, we are confident that TPG will continue to support the ongoing success of the business," adds Greencross chairman Stuart James.
In 2016, Greencross snubbed a $770 million takeover bid which was mooted by TPG together with alternative asset manager The Carlyle Group.
At the time, former CEO Martin Nicholas criticised that proposal as "opportunistic" and one which "fundamentally undervalued Greencross".
The company then went on to deliver an 18 per cent increased revenue of $326.7 million at the end of FY16.
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