InvoCare received unsolicited, non-binding indicative offer from TPG Global; Shares up on ASX

Key Highlights:

• InvoCare shares zoomed up following the unsolicited, preliminary, nonbinding indicative offer from TPG Global, LLC.
• Under this offer, each shareholder will get AU$12.65 cash per share of the Company.

On 07 March 2023, InvoCare Limited (ASX: IVC) received an unsolicited, preliminary, nonbinding indicative offer from TPG Global, LLC, to acquire 100% of the issued shares of InvoCare via a scheme of arrangement. Headquartered in Sydney, InvoCare is the leading provider of funeral services in Australia, New Zealand, and Singapore. The Company operates private memorial parks and crematoria in Australia and New Zealand. As per this Proposal, each shareholder of the Company will receive AU$12.65 cash per share of the Company, adjusted for any additional dividends or capital returns made by InvoCare before the completion of the transaction.

More About the Offer:

TPG Global, LLC has already acquired ~17.8% interest in InvoCare by means of physical ownership and derivatives and this offer would depend on the below two conditions:

• InvoCare Board is not engaging with third parties on an alternative change of control transaction during the due diligence period and discussion of binding transaction documents.
• IVC board supports TPG Global’s proposal.

The Indicative Proposal would depend on the conclusion of satisfactory due diligence, final consent of TPG Global’s Investment Review Committee, plus the signing of binding transaction documents on mutually acceptable terms. The transactions will also depend on regulatory approval and Foreign Investment Review Board approval.

At present, InvoCare Board has started the assessment of the Indicative Proposal. It has appointed Gresham Advisory Partners as financial adviser and Clayton Utz as legal adviser.

Why InvoCare is attracting investors?

InvoCare is a known player in the consumer services industry, providing death care services, as mentioned above. The Company has received huge market attention lately following its consistent growth in its revenue numbers.

In FY2022, the Company delivered strong results with 12% growth in its operating revenue to AU$588.5 million. The strong result was driven by continuing strategic momentum and strong recovery in key fundamentals.

During the period, InvoCare’s:

• Operating EBITDA increased by 9% to AU$136.1 million compared to FY2021.
• Operating EPS grew 11% to AU35.1 cents.
• The dividend increased 17% to AU 24.5 cents, representing a dividend payout ratio of 70%, within the Group’s preferred dividend payout range.

Several factors have supported the Company’s results. These include:

• Return to full-service farewells after lockdown, especially in the international market.
• FY2022 was the year of excess death.

Other than the strong financial results, the Company made significant progress during the period and is now positioned for the growth phase of strategy. Some of the key developments during the period were:

• Rolled out of new Cemeteries & Crematoria ERP.
• Acquisition of 8 legacy funeral businesses migrated to Group ERP.
• Initiated Pet Cremation operational integration.
• Acquired William Matthews Funerals (VIC).
• Upgraded key websites and digital & phone channels.
• Invested in 18 new cremators.
• Developed a new Pre-paid Funerals strategy.
• Expanded digital customer self-serve capability.
• Invested in Parting Stone.
• Growing M&A and partnership pipeline.

In FY2023, the Company will focus on maintaining operational excellence, cost efficiency & workforce planning. It would also streamline talent recruitment, on-boarding, and development. It also intends digital investments and improved sales lead capture & conversion.

Stock Information:

At AEDT 1:23 PM, IVC shares are trading at AU$12.125, up 35.474% from the previous close. 

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