New York-based private equity firm Warburg Pincus has submitted an improved bid exceeding $2 billion to acquire Australian retirement living and holiday parks operator Ingenia, although the offer was rejected by Ingenia’s board. The latest proposal values Ingenia at $5.05 per stapled security, up from a previous bid of $4.75 per share, but remains subject to Ingenia not proceeding with its planned acquisition of residential developer Peet.
In a move indicating escalating competition for control of Ingenia, the company has appointed Greenhill as an independent adviser alongside its existing advisers, Denison Partners and UBS. The board said this step underscores its commitment to a rigorous evaluation process.
Ingenia’s chief executive John Carfi is reportedly firm on pursuing the near $1 billion purchase of Peet, despite pressure from shareholders concerned that the deal could negatively affect Ingenia’s share price amid challenging market conditions, including rising inflation and a weakening housing sector.
The Ingenia board maintains that the Warburg Pincus offer undervalues the company and does not serve the best interests of security holders. It remains open to proposals that provide compelling value and have been communicated as such to Warburg Pincus and its advisers. The board faces a complex choice between potentially selling to private equity at what some consider a conservative price or allowing the Peet acquisition, which could weigh on the company’s performance for years.
Warburg Pincus expressed disappointment with Ingenia’s decision not to engage on its “materially improved” proposal submitted on September 14, following its initial bid on August 30. The firm reiterated that its all-cash offer represents a superior alternative to the Peet transaction for security holders and emphasized its willingness to continue discussions and complete due diligence. However, it noted limited time remains to finalize an alternative transaction ahead of Peet’s scheduled second court hearing.
The private equity firm is reportedly seeking backing from Canadian pension funds and other investors to support a potential higher offer. Some shareholders have urged Ingenia’s board to negotiate with Warburg Pincus at a price above $5 per share. Those familiar with shareholder sentiment indicated that while the revised bid at $5.05 was insufficient, an offer between $5.25 and $5.50 could gain acceptance.
Separately, there are reports of a rival suitor entering the fray, an Australian real estate manager believed to be preparing a competing bid for Ingenia and currently sourcing third-party capital. Speculation points to major players such as Stockland, the country’s largest listed developer with land lease operations, or The Living Company (formerly Scape), which owns student accommodation and retirement living assets under the Aveo brand.
Shares of Ingenia closed 3 cents higher at $4.35 on Monday, reflecting cautious investor sentiment amid the ongoing takeover contest.