Monash IVF Group Ltd (ASX: MVF) has rejected a takeover bid from a private equity consortium, stating that the offer price is too low despite being pitched at a significant premium to the company's last trading price.
Monash shares were last week trading close to their 12-month low of 53 cents, with the company's share price still yet to recover after a difficult year in which it was revealed it had botched two embryo implants.
The stock closed at 61 cents on Friday, valuing Monash at $237.7 million.
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Bid at a significant premium
The company said in a statement issued to the ASX on Monday morning that it had received and rejected a takeover bid priced at 80 cents per share.
The company said on Monday:
Monash IVF Group Ltd has received an opportunistic, unsolicited, conditional and non-binding proposal from a consortium comprising Genesis Capital Investment Management Pty Ltd … and WHSP Holdings to acquire 100% of the shares in Monash IVF by way of a scheme of arrangement.
The offer would be a cash offer priced at 80 cents per share, but there was the possibility that shareholders could continue to own a stake in the company under the proposal, Monash said.
As the company explained:
The proposal also includes a reference to the consortium considering options that would allow Monash IVF shareholders to roll their equity into unlisted equity in a privatised Monash IVF.
Monash said the consortium had indicated that it had already bought up a stake in the company of about 19.6% of its issued capital.
The bid was conditional upon the consortium being able to conduct exclusive due diligence and a unanimous recommendation from the Monash board.
Bid rejected as opportunistic
The Monash board said in its statement on Monday that it believed the bid was a low-ball offer.
The board has considered the proposal including with the assistance of its financial and legal advisers and unanimously determined that the proposal materially undervalues Monash IVF and is not in the best interest of the company's shareholders as a whole. The board has therefore determined to reject the proposal in its current form.
The board said the offer price was a "substantial discount'' to comparable transactions in the Australian market, and there was also uncertainty around the consortium's financing arrangements.
Monash IVF chair Richard Davis said:
The Monash board in consultation with its advisers has formed the view the proposal in its current form is opportunistic in its timing and materially undervalues the company.
The company said it would keep shareholders informed should matters develop further.
Fresh start in the wings
Monash earlier this month said it had selected a new Managing Director who would start in May next year.
The company ran into trouble earlier this year when it emerged that it had botched two embryo transplants, with one of those incidents resulting in a woman giving birth to a genetically unrelated baby.
The company's shares tumbled from levels above $1 per share in April, when news of one of the incidents, which occurred in Brisbane, was reported in the media.
The company stated at the time that it had been aware of the incident since February, when it initiated an investigation that found human error to be the cause.
Monash IVF's then-Managing Director, Michael Knaap, who had led the company since 2019, resigned in June, and the company also dropped out of the S&P/ASX 300 Index (ASX: XKO) at its September rebalancing.
