Pacific Smiles Group - NDC BidCo Raises Cash Offer to $2.05 Per Share
PACIFIC SMILES GROUP LIMITED (PSQ) Share Update August 2024 Thursday 1st
Pacific Smiles Group Receives Increased Cash Offer from NDC BidCo
Pacific Smiles Group Limited (ASX: PSQ) has announced that NDC BidCo Pty Ltd (NDC) has increased its all-cash offer for the company to $2.05 per share, surpassing a previous proposal from Genesis Capital Manager I Pty Ltd (Genesis Capital).
Instant Summary:
- NDC increases cash offer from $1.91 to $2.05 per share.
- 113.8% premium to the 1-month Undisturbed VWAP of $0.96.
- Implied EV / EBITDA multiple of 12x based on FY24 guidance.
- Scheme Meeting adjourned to 8 August 2024.
- Board recommends shareholders vote in favor of the NDC Scheme.
Offer Details
On 2 August 2024, Pacific Smiles Group Limited (ASX: PSQ) announced that NDC BidCo Pty Ltd (NDC) had increased its all-cash offer for the company to $2.05 per share. This new offer follows a revised proposal from Genesis Capital Manager I Pty Ltd (Genesis Capital) which offered $1.90 cash per share with an option for shareholders to receive shares in Beam Dental Holdings Ltd.
In response to Genesis Capital's proposal, NDC raised its offer from $1.91 to $2.05 per share, representing a significant premium over the previous offers. The Pacific Smiles Board has unanimously recommended that shareholders vote in favor of the NDC Scheme, subject to no superior proposal emerging and the Independent Expert not withdrawing or adversely changing its conclusion.
Financial Metrics
The NDC Counterproposal offers a 113.8% premium to the 1-month Undisturbed VWAP of $0.96 as of 15 December 2023. It also represents an implied EV / EBITDA multiple of 12x based on the midpoint of FY24 guidance, which is higher than all adjusted comparable dental and Australian health services transactions referenced by the Independent Expert.
Scheme Meeting and Voting
The Scheme Meeting to approve the NDC Scheme has been adjourned to 11:30am (AEST) on 8 August 2024. Shareholders who have already voted on the Scheme Resolution do not need to take any action unless they wish to change their vote. The Pacific Smiles Board strongly encourages all shareholders to vote, as their vote is crucial in determining whether the Scheme Resolution is passed.
Board Recommendation
The Pacific Smiles Board has assessed both the Genesis Revised Proposal and the NDC Counterproposal. Initially, the Board found the Genesis Revised Proposal to be superior due to its scrip alternative and potential CGT rollover relief. However, after NDC increased its offer to $2.05 per share, the Board determined that the NDC Counterproposal would produce a superior outcome for shareholders.
The Independent Expert has confirmed that the NDC Scheme remains fair and reasonable and is in the best interests of Pacific Smiles shareholders. Therefore, the Board continues to recommend that all shareholders vote in favor of the NDC Scheme.
The increased offer from NDC provides greater certainty of value for Pacific Smiles shareholders through its all-cash nature. The significant premium over recent trading prices is likely to positively impact the company's stock price. The higher EV / EBITDA multiple also suggests a strong valuation compared to industry peers, which could further boost investor confidence.
Investor Reaction:
Analysts are likely to view the increased offer from NDC as a positive development for Pacific Smiles shareholders. The certainty of an all-cash offer at a significant premium is expected to be well-received. However, some investors may have preferred the scrip alternative offered by Genesis Capital for potential tax benefits and future growth opportunities.
Conclusion:
Investors should consider the Board's recommendation and the Independent Expert's conclusion that the NDC Scheme is in the best interests of Pacific Smiles shareholders. The increased cash offer provides a significant premium and greater certainty of value. Shareholders are encouraged to vote in favor of the Scheme Resolution at the upcoming meeting on 8 August 2024.