The Aveo Group Ltd (ASX: AOG) share price has fallen 3.35% amid the worst day in over a year for the S&P/ASX200 Index (ASX: XJO).
However, Australia’s leading owner, operator, and manager of retirement communities also released an update regarding its Strategic Review process earlier today.
What were the key points from Aveo’s update?
Aveo said that commercial negotiations have continued between Aveo and the preferred party, Brookfield Property Group, together with its affiliates and their managed funds (“Brookfield”) since its announcement on 22 July 2019.
22 July was the company’s last Strategic Review update, in which Aveo said significant progress had been made in its negotiations despite no certainty that definitive agreements would be entered into.
The Independent Board Committee (“IBC”) is continuing to engage with Brookfield in order to resolve a number of matters to give effect to the non-binding and conditional indicative proposal (“Indicative Proposal”) and enter into a definitive agreement leading to a Scheme of Arrangement for a whole-of group transaction.
Aveo said that any such agreements would be subject to the usual fiduciary carve-outs (for example, in relation to a superior proposal).
In response to price speculation, Aveo noted that the indicative cash offer price currently under discussion with Brookfield is $2.195 cash for each Aveo stapled security.
At the time of writing, the Aveo share price $1.965 per share, indicating an 11.7% premium to its current market value.
Aveo said the indicative offer price would be reduced by the value of any distributions subsequent to the entry into a definitive agreement (including its FY19 annual distribution of 4.5 cents per stapled security as announced on 24 June 2019).
However, the negotiations remain incomplete and entry into definitive agreements would be subject to Aveo Board approval.
Aveo said that there is no certainty that definitive agreements will be entered into at the indicative price (or at all), that the Indicative Proposal will result in an acceptable offer for Aveo security holders or that a transaction will be implemented.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.