Pacific Smiles Rejects Genesis Capitals Indicative Proposal, Citing Undervaluation

Highlights:

• Pacific Smiles Group Limited has officially rejected the unsolicited, non-binding indicative proposal from Genesis Capital Manager I Pty Ltd.
• The Board expresses confidence in Pacific Smiles' prospects, emphasizing the recent appointment of Mr. Andrew Vidler as Managing Director.
• The Board highlights several reasons for rejecting the Indicative Proposal, including inadequate reflection of strategic value.

Board Rejection and Share Price Disappointment

Pacific Smiles Group Limited (ASX: PSQ) has officially rejected the unsolicited, non-binding indicative proposal from Genesis Capital Manager I Pty Ltd (Genesis Capital) to acquire all its shares for $1.40 in cash per share. The proposal also suggested the option for shareholders to roll their shares into unlisted equity. Despite acknowledging Pacific Smiles' recent share price underperformance, the Board deems the proposal opportunistic and materially undervaluing the company.

Confidence in Prospects and Managing Director Appointment

The Board expresses confidence in Pacific Smiles' prospects, emphasizing the recent appointment of Mr. Andrew Vidler as Managing Director. Despite disappointing share price performance, the Board believes in the strategic value of Pacific Smiles, including its single company-owned brand model, proprietary IT platform, market position as Australia's third-largest dental service organization, and organic growth capability.

Key Reasons for Rejection and Future Steps

The Board highlights several reasons for rejecting the Indicative Proposal, including inadequate reflection of strategic value, capital investment during the pandemic, potential synergies, strong trading momentum, and a forward EV/EBITDA multiple of 8.1x based on FY24 guidance. Pacific Smiles intends to offer limited access to non-public information to Genesis Capital to explore a potentially improved proposal.

Continuous Disclosure and Shareholder Assurance

Pacific Smiles assures shareholders that no immediate action is required in response to the Indicative Proposal. The company commits to keeping shareholders and the market informed in line with continuous disclosure obligations. Simultaneously, Pacific Smiles has released a trading update and FY24 guidance to the ASX, providing additional insights into the company's performance and outlook.

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