InvoCare takeover talks turn sluggish; Ares ready to lend
It’s stops and starts in the tussle between TPG and InvoCare, the ASX-listed funerals business the private equity suitor is hoping to mop up.
For a start, the exclusive negotiating period between the two parties ended last week. Little chance of an interloper there, considering the Joel Thickins-run private equity house has some 20 per cent of the shareholder register.
Australia’s death rate has fallen in the last year, according to the Australian Bureau of Statistics. Nick Moir
It has been pretty quiet at InvoCare – which runs the White Lady Funerals and Simplicity Funerals brands – with a few brief updates earlier this month, the last on July 11, which did not include a reconfirmation of the $13 per share proposal lobbed on May 15. Shares last traded at $12.37, with investors clearly nervous that things were going seriously off-piste.
This might steady their nerves. Sources told Street Talk that TPG has lined up its debt financing. It is understood the firm has been in talks with New York-listed alternatives manager Ares Management for about $800 million of debt funding to help mop up the deal.
It was structured as unitranche at about six-times leverage. Ares would syndicate a slice of the InvoCare buyout debt, with sources saying Metrics Credit Partners would likely be interested.
But the big question is not financing. It’s the price. High on the list of reasons that the share price is almost five per cent below the $13 offer is widely held concern that TPG is having trouble confirming that figure after due diligence.
After all, that’s what confirmatory due diligence is all about. No doubt there is a Mexican standoff between the InvoCare board and its suitor on value, although sources with knowledge of conversations
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