After three months of bids, the board of in-vitro fertilisation (IVF) company Virtus Health (ASX: VRT) has agreed to a takeover offer from UK private equity firm CapVest for $706 million, amidst "overwhelming support" from the group's fertility specialists.
With CapVest's offer now at $8.25 per share, the proposed deal marks a 58 per cent premium to the VRT share price before BGH Group made its initial offer in mid-December last year.
The two parties have entered a transaction implementation deed (TID) that would allow CapVest to acquire either 100 per cent of the company through a scheme of arrangement (SID), or make an off-market takeover offer at $8.10 per share if the scheme fails but there is still a 50.1 per cent acceptance from shareholders.
BGH progressively increased its stake in Virtus to around 20 per cent, but hasn't yet attempted to bring any director nominations into the fold, so at this point, the fertility multinational has unanimously recommended a transaction in the absence of a superior proposal.
A scheme booklet is due to be sent in May ahead of a shareholder vote in June.
"The strong contest for control of Virtus and the certain and superior value placed on Virtus by CapVest is a testament to Virtus’ market leading position and the benefits of the precision fertility strategy which will harness technology and data to improve pregnancy outcomes as well as improve clinician and patients’ experience," says Virtus’ managing director and CEO Kate Munnings.
"It is also a strong endorsement of all Virtus staff and fertility specialists who continue to work extremely hard to help more people become parents.
"Support from CapVest will provide a strong foundation for Virtus and its fertility specialists to further develop their practices and accelerate the national and international growth of Virtus."
Virtus executive director Lyndon Hale says CapVest is well-positioned to support the group's fertility specialists as they continue to grow their market-leading practices and deliver the best possible outcomes for our patients.
"“CapVest has received overwhelming support from our fertility specialists, who recognise the compelling prospects for Virtus presented by the Binding CapVest Proposal," Hale says.
CapVest senior partner Kate Briant says her team have been "thoroughly impressed" throughout the process, not only by the strength of the business but also by the passion and dedication of Virtus’s leadership, including its outstanding team of expert and caring clinicians.
"We’re delighted to have reached an agreement with the board of Virtus Health and look forward to working closely with the team to support the continued growth of this industry-leading fertility business," she says.
"CapVest has a 20-year track record of partnering with industry leading companies and management teams in the healthcare sector to enhance services provided to health care professionals and their patients. With our access to capital, technical expertise and knowledge of the global fertility market, combined with the strength of the Virtus Health business and its team of experienced practitioners, we have exciting plans to continue to grow its position in Australia and support its continued international expansion.
"In realising this ambition, we will leverage our considerable investing experience across the world and access to significant new investment."
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.
VRT shares have risen by 7.14 per cent today to exactly the proposed $8.25 level planned under the TID.
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