Virtus Health (ASX:VRT) share price jumps 8% on fresh takeover offer

The Australian healthcare company has received another takeover offer for shareholders to ponder…

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Key points

  • The Virtus Health share price is up 8% after exiting a same-day trading halt
  • The fertility company has received an offer from CapVest to acquire 100% of the business
  • Virtus has granted the investment firm “exclusive due diligence” in its purchase offer

The Virtus Health Ltd (ASX: VRT) share price is soaring after exiting a same-day trading halt around midday.

The halt prefaced a proposal from European investment firm, CapVest Partners LLP, to acquire 100% of the company in a scheme of arrangement.

According to Listcorp, the Australian healthcare company is among the top 5 providers of assisted reproductive services in the world, with a strong foothold in Australia, Ireland, Denmark, and a growing presence in both Singapore and the United Kingdom.

At the time of writing, the Virtus share price is up 7.92% at $7.22 apiece.

Let’s take a look deeper into CapVest’s takeover proposal…

CapVest’s proposal to Virtus Health

London-based CapVest has offered Virtus one of two options:

  • $7.60 cash per share in exchange for a 100% acquisition of the business
  • $7.50 cash per share off-market bid, with 50.1% minimum acceptance condition.

Virtus currently has 85.54 million shares issued.

Both offers are non-binding, and are subject to the conditions of “satisfactory completion of due diligence on Virtus and its business”, and complete agreement from directors of the Virtus board.

However, the offers do require the healthcare company to give CapVest “exclusivity and cost recovery protections”.

In addition, if implemented, the agreement must:

  • Meet regulator, shareholder and court approval, and be determined as in the best interests of Virtus by an independent expert
  • Not incur a “court order or regulatory impediment” before completion.

This may relate to the healthcare company’s current situation with the Australian Competition and Consumer Commission (ACCC) in acquiring Adora Fertility and 3 Day Hospitals from Healius Ltd (ASX: HLS) for $45 million.

The acquisition was announced in late August, subsequently seeing the company’s share price trend downwards.

Soon after, the ACCC stepped in to stop the takeover. In its AGM address back in November, Virtus said the takeover was still yet to be finalised.

Prior proposal from BGH

CapVest isn’t the only investment company to make a move on Virtus lately…

Back in mid December, the Virtus share price leapt 34% on news the company had received an “unsolicited non-binding indication of interest” from private equity group, BGH Capital Pty Ltd.

BGH advised it had already acquired 8.5 million shares (a 9.99% interest) in the healthcare company at $7.10, as well engaging in a “total return swap” Virtus shares owned by Swiss investment bank, UBS.

All in all, this represents a 10% interest in the company for BGH.

However, the Virtus board has since reviewed BGH’s offer, and deemed CapVest the more attractive option.

Therefore, Virtus will allow CapVest to conduct “exclusive due diligence” in developing a firm, binding offer for the company.

Further, Virtus has agreed into a process deed — agreeing to pay $2 million to the firm in the event that it does not wish to proceed with the acquisition. This fee will increase to $4 million if Virtus elects a competing proposal during an agreed time between the two companies.

At time of writing, there is no time frame for when a decision on the CapVest/Virtus acquisition will be made.

Virtus Health share price snapshot

The Virtus share price has increased 33% over the last 12 months, and is up 6% in the past week.

The company has a market capitalisation of $617 million at the time of writing and a price-to-earnings ratio (P/E) of 13.4.

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Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Virtus Health Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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