)
After months of deliberations over a non-binding takeover offer from Genesis Capital that recently reached a value of $279 million, the board of Pacific Smiles (ASX: PSQ) has struck a deal with new suitor National Dental Care (NDC) for the company to be bought for $303 million.
The board were previously prepared to recommend a deal with Genesis if they could reach a more concrete agreement, but with Crescent Capital Partners-affiliated NDC now offering an 8.6 per cent premium at $1.90 per share it has concluded the new proposal is superior.
This compares to the $1.40 per share Genesis was offering when it started the bidding in December last year, following a history with Pacific Smiles co-founder and substantial shareholder Dr Alex Abrahams who had lost the fight against Genesis in trying to snap up the assets of dental roll-up Smiles Inclusive from administration in 2021.
A tie-up would have seen Pacific Smiles' 110-plus clinics under the same ownership as Impression Dental which includes Smiles Inclusive's Totally Smiles brand and several others, and is led by former Smiles Inclusive chief operating officer (COO) Mark O'Brien.
Instead the board has opted to enter a scheme implementation deed (SID) with NDC for the cash buyout, which if approved by shareholders would see Pacific Smiles join a group with more than 80 practices around the country, having grown from just four practices in Brisbane when it was founded in 2013.
"The board of Pacific Smiles is focused on maximising shareholder outcomes. After careful consideration and having received advice from its legal and financial advisers, the board of Pacific Smiles has determined NDC’s binding proposal, reflected in the SID is a superior proposal to the Genesis Capital revised indicative proposal," the board states.
The offer under the scheme represents an enterprise value multiple on the mid-point of FY24 EBITDA guidance of around 11x and an equity value of $303 million based on ordinary shares outstanding.
Pacific Smiles will have the discretion to pay shareholders a fully franked dividend of up to a maximum of 12 cents per share, although the cash consideration of $1.90 per share will be reduced accordingly.
The board unanimously recommends shareholders vote in favour of the scheme at a scheme meeting due in late July, with directors indicating they will all be voting for the deal.
The scheme is however conditional on an independent expert determining the buyout is in the best interests of shareholders, while a deal would also requires court and Foreign Investment Review Board (FIRB) approval. A report is set to be sent to shareholders in June ahead of the July vote.
If all these conditions are met, Pacific Smiles expects the scheme to be implemented in August.
)
)
)
)
)
