Metlifecare takeover in the wind

A takeover bid for retirement village operator Metlifecare could be imminent. Metlife founder Cliff Cook, who is selling his 25 per cent stake in the group, is understood to have had secured three separate offers and will decide which to accept by the end of the month.

The bidders' names are not known, but they are understood to include two from the retirement homes industry and a private equity group. Names being linked to the deal include property group FKP; retirement facility developer Primelife and its shareholder, Babcock & Brown, and private equity investor Pacific Equity Partners.

Under New Zealand takeover rules any investor acquiring more than 20 per cent of a company's shares must launch a takeover for the entire company. But in this case the deal will not be that simple.

Under a 1999 shareholder agreement Cook first has to offer his shares to Todd Capital, which holds 35 per cent of Metlifecare, at the same price he has agreed to sell to the prospective buyers. If Todd does not agree to the price it has to sell its stake to the buyer Cook has lined up.

The agreement has already delayed the sale once. On April 18, the stock exchange was told Cook had offered his 21.7 million shares to Todd Capital for $3.72 each, or $80.7 million. But the deal fell over.

Metlifecare has been silent on the deal since. Its shares closed on Friday up 5c at $3.60.

Cook is selling out of the company to concentrate on his investments overseas. But his stake is seen as a good opportunity because of a rapid growth in the aged population. The highly fragmented sector is also ripe for consolidation.

Two operations have changed hands this year. Macquarie Bank bought Eldercare from Abano in May for $63.5 million. In July, Australian company DCA acquired the country's largest private rest home operator, Guardian, for $300 million.

In the half-year to June, Metlife's profits rose from $8.2 million to $8.8 million, despite flat sales of $54.6 million. The profit rise reflected improved selling prices on its villas.

Metlife said it was on track to deliver a 2005 full-year net surplus of $21.5 million.