New Zealand-based retirement village operator Metlifecare (NZX:MET) has agreed to buy rivals Vision Senior Living and Private Life Care Holdings and their combined eight villages for about $116 million ($92 million U.S.D.).
“The merger will strengthen Metlifecare’s presence in the key Auckland retirement village market and ensure that the company continues to compete strongly in the New Zealand retirement village sector,” said Alan Edwards, managing director of Metlifecare, in a statement.
The acquisitions are expected to be immediately cash flow accretive and will drive growth and shareholder value, Edwards continued.
A total of eight villages have been added to Metlifecare’s portfolio through the merger, with three from Private Life Care Holdings (PLC) and the remainder from Vision Senior Living (VSL). They are located in “premium” locations in Auckland, Hamilton, Papamoa, and Kerikeri, and increases Metlifecare’s portfolio to 24, including three villages in development stage.
The newly-expanded retirement village operator now owns 3,902 units, up from 2,460.
Metlifecare will fund the transaction by issuing approximately 51.5 million new ordinary shares to VSL’s and PLC’s shareholders. The company plans to issue a further 4.2 million shares in exchange for nearly $8 million (U.S.D.) in capital raised from the existing Vision shareholders to pay down debt. The total transaction will increase the number of shares on issue from 144.1 million to approximately 199.8 million.
VSL is currently 68% owned by private equity funds managed by Goldman Sachs, and the balance by private shareholders in Arrow International Group Limited.
PLC is 100% owned by Retirement Villages New Zealand Limited, a subsidiary of unlisted investment fund Retirement Villages Group—Metlifecare’s major shareholder. Because of this, as a related party to the transaction, Retirement Villages Group will be excluded from voting on a resolution put to shareholders during a special meeting regarding the acquisition. The group has indicated it will sell down its expanded shareholding by 16.5 million shares to retail investors, taking its shareholding to below 50%.
Total assets will be in excess of $2 billion (nearly $1.6 million U.S.D.), with total equity of approximately $789 million ($627.7 million U.S.D.). Following the merger, Metlifecare’s debt as a percentage of investment property will increase to 18.7%.
Written by Alyssa Gerace