This article is from the Australian Property Journal archive
RETIREMENT community operator Aveo Group continues to talk with suitor Brookfield about a circa $1.27 billion takeover.
Aveo recently granted the Canadian giant more time to negotiate acquisition terms, and the price tag – at $2.195 cash per security – is the first public acknowledgement from either party about the value of the deal.
The indicative offer price would be reduced by the value of any distributions subsequent to entry into a definitive agreement, including the annual distribution of 4.5 cents per stapled security.
“However, the negotiations are incomplete and entry into definitive agreements would be subject to Aveo board approval. There is no certainty that definitive agreements will be entered into at the indicative price (or at all), that the indicative proposal will result in an acceptable offer for Aveo securityholders or that a transaction will be implemented,” Aveo said.
Aveo confirmed Brookfield as the preferred party last month.
Early in 2017, Aveo was the subject was a damning investigation by Fairfax and the ABC that exposed excessive fees and questionable regulations practices, and in August appointed Merrill Lynch as financial advisor for a strategic review of its retirement portfolio and operations.
The group has revealed that property market conditions would slash its annual underlying profit from around $127 million the last financial year to $50 million for FY19, and annual distributions would be nearly halved to 4.5 cents per stapled security.
The company said that despite some improvement since mid-May, the subdued market “continues to have an adverse impact on the timing of prospective residents who are seeking to settle on their existing properties and move into seniors living accommodation”.
