Dental group receives takeover bid at a handy premium

This ASX-listed dental group looks likely to be taken over under a new offer.

Key points
  • Pacific Smiles has received a takeover offer at a 37.5% premium.
  • An independent board committee has recommended shareholders accept the offer.
  • The bidder already owns almost 90% of the company's shares.

ASX-listed dental company Pacific Smiles Group Ltd (ASX: PSQ) has received a takeover bid from its majority shareholder, Genesis Bidco, at a 37.5% premium to the share price prior to the bid announcement.

The bidder, which currently owns 89.27% of Pacific Smiles, has offered $2.20 in cash for each share in the company it doesn't already own, compared with the closing price on Thursday of $1.60.

Pacific Smiles has established an independent committee to assess the bid, and that committee has unanimously recommended that shareholders accept the offer in the absence of a superior bid.

The committee has also commissioned an independent expert's report into the bid, to assess whether it is fair and reasonable; however, the company said Deloitte Corporate Finance, which would produce the report, at this stage concluded that the bid was in the best interests of shareholders.

The independent board committee has carefully considered the offer to assess whether it is in the best interest of Pacific Smiles shareholders other than Genesis Bidco and its associates and, having completed that work, unanimously recommends that shareholders accept the offer.

The takeover offer is unconditional and is not subject to regulatory approval.

Businesswoman holds hand out to shake.

Image source: Getty Images

Takeover virtually a fait accompli

The company stated in its ASX announcement on Friday that a competing bid was highly unlikely, given the dominance of the majority shareholder and the fact that the next largest shareholder held a 10.01% stake in the company.

This meant the remaining shareholders own just 0.72% of Pacific Smiles.

The company in August reported an underlying profit of $11.8 million for FY25, up from $8.5 million the previous year, on revenue of $196 million, up 9.1%.

The company spent $11.6 million during the year responding to two previous takeover offers from Genesis Bidco and another vehicle, NDC Bidco, with the money allocated to legal fees and external consulting.

The earlier Genesis takeover offer was launched in July last year and offered $1.90 per share for the company, or a combination of cash and stock in the bidding company.

Pacific Smiles shareholders voted against the NDC proposal at a meeting held in August last year. NDC then walked away from the bidding process, and Genesis relaunched its offer and started building up its stake in the company.

Pacific Smiles shares are thinly traded, with an average trade volume of about 1500 shares.

The company was valued at $258.6 million at the close of trade on Thursday.

Motley Fool contributor Cameron England 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.

More on Healthcare Shares

Doctor with stethoscope typing on her computer.
Healthcare Shares

Are CSL shares a buy, hold, or sell at their 52-week high?

Investors have become much more optimistic about its future. But has the share price recovery gone too far?

Read more »

Senior man looking at his laptop and pondering something.
Healthcare Shares

Would I buy ResMed shares after today's results?

The company has reported solid revenue and earnings growth. Here's what I make of its performance and current valuation.

Read more »

Group of doctors celebrate by pumping fists in the air.
Healthcare Shares

Why are Mesoblast shares racing 15% higher today?

Find out what caught investor interest.

Read more »

Happy doctor using her laptop.
Healthcare Shares

Should I buy Cochlear and Mesoblast shares with $5,000?

These two companies are at different stages of their growth journeys. Here's which I'd choose for a long-term investment.

Read more »

A man in his office leans back in his chair with his hands behind his head looking out his window at the city.
Healthcare Shares

Are ResMed shares a strong buy before its results on Friday?

Here's my verdict on whether I'd buy shares before the announcement.

Read more »

A doctor looks unsure.
Healthcare Shares

Could CSL shares smash past $200 in the next 12 months?

Are CSL shares a buy, sell, or hold now?

Read more »

A group of people in a corporate setting do a collective high five.
Healthcare Shares

3 ASX 200 healthcare shares to buy with 35% to 103% upside ahead

Are any of these ASX shares in your portfolio?

Read more »

Two health professionals working on a computer.
Healthcare Shares

How much could the CSL share price rise in the next year?

Can this healthcare giant continue with its strong rise?

Read more »