The Japara Healthcare Ltd (ASX: JHC) share price is going bananas and is up over 18% on the news of a takeover.
Japara takeover
The company announced that it has entered into a ‘scheme implementation deed’ with Little Company of Mary Health Care Ltd (Calvary) for the takeover of 100% of Japara shares.
Japara’s board have all agreed that the bid is worth accepting, if no better offers are made and subject to an independent expert’s review.
Japara shareholders will get $1.40 per share in the takeover. This is 75% higher than the share price of $0.80 on 29 April 2021, before takeover bids were made and had an effect on the share price.
The takeover offer price values Japara’s market cap at $380 million, with an enterprise value of around $588 million.
Multiple bids
The company said that it received non-binding offers from both Calvary and another party. Japara agreed to provide both parties with due diligence so that the the offers could move from non-binding to binding, therefore being able to be recommended to shareholders. The period of due diligence has recently ended.
The nitty gritty details for shareholders
Japara said that shareholders do not need to take any action at this present time.
The takeover is expected to be voted on at a meeting in October 2021. Japara’s directors each intend to vote in favour of the takeover.
The takeover is subject to a few other customary conditions that are normal for this type of transaction.
Shareholders will receive detailed information and the independent expert’s recommendation in September 2021.
Management comments
Japara Chairman Linda Bardo Nicholls AO said: “The Japara Board is pleased to unanimously recommend this proposal to shareholders… In making this assessment, the Board considered a number of alternatives including a competing proposal and standalone value creation from the execution of our existing strategy. After careful consideration of the future opportunities for Japara, along with sector and regulatory uncertainty, and execution risks, the Board has determined that the Scheme delivers compelling value to Japara shareholders.”
Japara share price
Summary thoughts on the Japara share price
The Japara share price is up 18% to $1.38 at the time of writing. This is 2 cents per share lower than the takeover price. Japara has recovered substantially and is up 175% over the past year.
However it paints a very different story if you bought at the share price peak of $3.40 in November 2015, with the share price down 59% from that point.
If I were a current shareholder of Japara I would be wondering if I should sell now or wait for the takeover price. It’d depend on if there is another share at a good price that I’m interested in, if so I’d sell today and redeploy the cash. If there are no opportunities, then it could be worth waiting for the takeover or perhaps a higher bid.
