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Greencross Limited (ASX:GXL) shares in a trading halt following takeover approach

Greencross Limited (ASX: GXL) shareholders will certainly have a lot to talk about at the integrated pet care company’s annual general meeting in Sydney today.

Ahead of the presentation the company released a trading update which revealed that it has had a positive start to the financial year.

For the first 17 weeks of FY 2019 Greencross has seen its revenue grow 7.6% thanks to the combination of a 5.4% increase in like for like sales and the contribution of new stores.

The key driver of its like for like sales growth was its retail operations. These operations achieved a 6.4% like for like sales increase on the prior corresponding period, offsetting a disappointing performance from its standalone veterinary clinics.

The latter has seen like for like sales fall 1.8% compared to the prior corresponding period due to challenging market conditions.

But that isn’t the only thing that shareholders will be discussing today. Last month Greencross revealed that it was engaging with a number of parties regarding credible proposals.

These discussions appear to have gone well, with the company requesting a trading halt this morning because management “is in discussions regarding a potential acquisition of 100% of the issued shares of the company.” It has requested that its shares remain halted until Tuesday of next week.

What offer has been made?

The company has yet to reveal any further information regarding the takeover talks, but media reports have speculated that the suitor is TPG Capital.

According to the AFR, the two parties were in the final stages of talks on Thursday night and are closing in on a deal.

Sources have told the media outlet that Greencross and TPG Capital are confident a deal can be struck as soon as today, with fund managers tipping a deal above $5.00 per share. This compares to its last close price of $4.54.

As with fellow takeover targets Capilano Honey Ltd (ASX: CZZ), Healthscope Ltd (ASX: HSO), and Navitas Limited (ASX: NVT), I think this could be a good result for shareholders following several years of underperformance.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Greencross Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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