ASX 200 stock InvoCare rallies 37% on takeover approach

The InvoCare share price is rising from the dead after receiving a takeover approach.

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Key points

  • InvoCare shares are jumping on Tuesday following the receipt of a takeover approach
  • TPG has made a non-binding offer of $12.65 per share
  • The InvoCare share price hit a 52-week low on Monday after crashing during earnings season

The InvoCare Limited (ASX: IVC) share price is shooting higher on Tuesday morning.

At the time of writing, the funeral company's shares are up 37% to $12.26.

Why is the InvoCare share price racing higher?

Investors have been bidding the InvoCare share price higher today after the company received a takeover approach.

This followed the release of notice of initial substantial holder which revealed that Singapore-based company Blue Eternal and private equity firm TPG Asia have snapped up a significant holding in the funerals company.

The two parties have acquired a combined relevant interest and economic interest of 17.81% in InvoCare shares.

Blue Eternal and TPG paid a total of $309,877,486.60 for the shares, which equates to an average of $12.65 per share. This represents a massive 41.3% premium to the InvoCare share price at the close of play on Monday.

InvoCare confirms offer

Just before the market open, InvoCare confirmed that it has received an unsolicited, preliminary, non-binding indicative offer from TPG to acquire 100% of the issued shares of InvoCare by way of scheme of arrangement.

Under the indicative proposal, InvoCare shareholders would receive $12.65 cash per InvoCare share, adjusted for any additional dividends or capital returns made prior to completion of the proposed transaction.

The offer is subject to conditions including the completion of satisfactory due diligence, final approval of TPG's Investment Review Committee, regulatory approval, and execution of binding transaction documents on mutually acceptable terms.

It also stipulates that the InvoCare board cannot have any engagement with third parties on an alternative change of control transaction during the due diligence period and negotiation of binding transaction documents.

The InvoCare board has now commenced an assessment of the indicative proposal. It has advised that shareholders do not need to take any action at this stage and warned there is no certainty that the proposal will result in a transaction.

While this offer is a significant premium to the current InvoCare share price, it is worth highlighting that it hit a 52-week low on Monday and was down 20% in the space of a month. The offer is also only a fraction above InvoCare's 52-week high, which arguably makes it somewhat opportunistic.

Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. 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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