Washington H. Soul Pattinson (ASX:SOL) launches Regis Healthcare (ASX:REG) takeover

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) has made an approach to takeover Regis Healthcare Ltd (ASX:REG)…

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The Regis Healthcare Ltd (ASX: REG) share price will be on watch on Friday after a late announcement relating to the aged care operator.

What is happening?

After the market close, investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) announced that, together with its partner Ashburn Pty Ltd, it has submitted a non-binding, indicative proposal to acquire Regis Healthcare.

According to the release, Washington H. Soul Pattinson has tabled an offer of $1.85 per share to acquire the company via a scheme of arrangement. This remains subject to due diligence.

Ashburn Pty Ltd is an entity controlled by Bryan Dorman, a co-founder and major shareholder of Regis Healthcare. It currently controls 27.2% of Regis’ ordinary shares on issue.

While Washington H. Soul Pattinson’s takeover offer represents a 25% premium to its last close price, it is also 42% lower than the Regis Healthcare share price 52-week high.

What now?

Washington H. Soul Pattinson has proposed two alternative forms of consideration to Regis shareholders.

One is a full cash consideration and the other is a scrip alternative in a newly incorporated company. This will give Regis shareholders the option of retaining an exposure to the company as a privately operated business.

The investment house believes the proposal will be attractive to Regis shareholders and advised that it looks forward to engaging collaboratively with the Regis board in the hopes of progressing the proposal.

Washington H. Soul Pattinson’s Chairman, Rob Millner, said: “WHSP is a patient and long-term investor and is committed to providing access to capital and support to Regis as it navigates through this challenging period and transitions to a new operating environment in the future.”

“Given the regulatory uncertainty and funding challenges currently facing the aged care industry, WHSP believes that Regis’ long-term prospects will be best served in a privately owned setting and that WHSP’s long investment horizons and access to capital make it and Ashburn Pty Ltd logical partners to oversee Regis’ growth and development,” he added.

Bryan Dorman, from Ashburn Pty Ltd, believes the proposal offers compelling value for shareholders.

He said: “I am passionate about the aged care industry and its incredibly important role in the community. The regulatory uncertainty and challenges facing the residential aged care sector are significant. As a founder and shareholder of Regis, I believe that WHSP’s proposal offers compelling value for Regis’ shareholders. Further, WHSP’s longer term investment strategy will provide the strength and stability for the benefit of our residents and employees.”

Regis Healthcare has yet to comment on the approach.

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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 Washington H. Soul Pattinson and Company 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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