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Village merger creates waves
The proposed merger between retirement village operators, Metlifecare, Vision Senior Living, and Private Life Care has left the retirement village industry and investors buzzing.
The parties have signed off on a deal whereby Vision shareholders will receive 21 million Metlifecare shares in exchange for 100 per cent of Vision Senior Living, which is currently 68 per cent owned by Goldman Sachs. Vision shareholders have also agreed to subscribe for 4.2million Metlifecare shares at $2.405 each, with the proceeds used to repay debt.
Metlifecare investors, who include AMP, Fisher Funds, and Devon Funds Management, are reportedly surprised at the proposed deal and are said to be considering it.
The merger has also received mixed reviews from other investment experts. Macquarie Equities Research analyst Stephen Ridgewell has described the deal as “a merger made in heaven”, while UBS analyst Wade Gardiner was more critical of the mounting levels of debt.
The merger news comes after a major structural and ownership shake-up for Metlifecare last year, when the company raised just under $100 million from a share issue and placement and $40 million in fresh capital. The Retirement Village Group also sold down its stake from 82 per cent to 51 per cent.
Retirement Village Group, which also owns 100 per cent of PLC, will exchange PLC for 30.5 million Metlifecare shares.
Vision Senior Living general manager for sales and marketing, Aidan Craig, said the company’s decision to merge with NZX-listed Metlifecare, was one of a few potential directions under consideration.
“The merger was one of a few strategies on the cards for Vision,” says Craig.
Vision was last year touted as a possible initial public offer and share float. However, Craig confirms shareholders perceived the merger with Metlifecare to be the best option going forward.
“Vision Senior Living has a very good synergy with Metlifecare,” says Craig. “There are really strong reasons for both parties to merge. Vision brings development expertise and a growth pipeline to the relationship, and Metlifecare brings grunt and stability.”
Certainly, Metlifecare’s mature cash flows will enable both PLC and Vision to further expand their horizons.
There will be opportunities for eventually merging aspects of the overall operation between the companies, but Craig says there is a strong desire from both parties to not make changes for changes sake as the villages are very successful in their own right.
“One of the beauties of the merger is that the majority of our villages don’t directly compete with each other,” says Craig. Vision doesn’t foresee any competition with PLC villages either.
Papamoa is the area where a Vision village is geographically close to a Metlifecare village, yet even in this instance, there are substantial differences between Metlifecare Bayswater and Vision Papamoa.
One thing is certain, with their combined portfolios and skills, the merged operator will firmly cement themselves as one of the giants of the retirement village industry.
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