The board of pet care company Greencross Limited is unanimously recommendingthat shareholders vote in favour of a proposed scheme implementation agreementthat will see the 100 per cent of the business acquired by private investmentfirm TPG.

The scheme would afford shareholders $5.55 per share, with an implied equityvalue of $675 million; both below the rejected takeover offer made by TPG twoyears ago.

In 2016, TPG offered the business $6.45 per share, equalling a $736 millionoffer, which the pet care business turned down; stating it “fundamentallyundervalues Greencross”.

However, shares in the company spiked after the announcement jumping from$4.54 a share late last week to $5.40 per share on Monday afternoon.

“In reaching our conclusion that the scheme is in the best interest ofshareholders, the board has considered a number of alternatives, includingstandalone value creation opportunities and alternative proposals from otherpotentially interested parties,” Greencross chairman Stuart James said in anote to investors.

“Upon assessing the alternatives before it, the Board has unanimouslyconcluded that the scheme is a compelling option which realises attractivevalue for our shareholders.”

Shareholders are expected to vote on the matter in early 2019, though the datemay be subject to change.

Last month, Greencross confirmed it was considering an acquisition proposalfrom TPG after the company’s net profit dropped 51 per cent to $20.7 millionin FY18.

Despite falling profits, the business maintains a healthy mix of retail andservice-based offerings, as well as a highly engaged customer database with aloyalty program that touches 90 per cent of retail sales.

TPG’s head of Australia and New Zealand Joel Thickins said the investment firmis confident the Greencross business will continue to grow under privateownership.

Source: Inside Retail

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