By Rashmi Ashok
(Reuters) - Metlifecare Ltd on Monday backed a sweetened NZ$1.49 billion ($996.07 million) buyout offer from Swedish private equity firm EQT AB after a property market slump and climbing construction costs eroded its bottom line.
The retirement village operator agreed to an offer of NZ$7 per share, which is NZ$0.50 richer than EQT's initial offer price disclosed on Dec. 19, which came through its unit Asia Pacific Village Group Ltd.
The latest bid is at a near 10% premium to Metlifecare shares' Dec. 20 closing level, when trading was halted. Its shares jumped 7.1% to an over 12-year high on Monday at NZ$6.83, just 17 cents shy of the offer price.
Metlifecare's board had said EQT's initial offer undervalued the company. However, with two other potential suitors in the fray, EQT soon raised its bid.
The buyout proposal comes as a boon for Metlifecare, after it logged a 68% plunge in annual reported profits for the year ended June 30, as a slower real estate market in New Zealand and higher construction costs ate into margins.
"There are a lot of retirement village operators in New Zealand who trade on much higher premiums to their assets," added Jeremy Sullivan, investment adviser at Christchurch-based Hamilton Hindin Greene.
"Metlifecare was fundamentally the cheapest stock, and the reason for that is they have a lot of old villages which need remediation and the cost of which would be significant," Sullivan added.
On Monday, Metlifecare put its weight behind the fresh offer, adding that it had also received strong support from a number of institutional shareholders.
Sullivan said there was a strong possibility Metlifecare was giving rival suitors room to revise their offers, having set a April 2020 voting date for its shareholders.
EQT, with about 41 billion euros ($45.90 billion) in assets under management across 20 active funds, has been vocal about its growing ambitions in the Asia Pacific region as it seeks to move away from being a Nordic-focused investor.
In June, EQT abruptly shelved an A$3.3 billion bid for Australian telecom company Vocus Group Ltd after completing due diligence.
In a separate announcement on Monday, EQT said it had entered into a deed with its target's largest shareholder, New Zealand Superannuation Fund Nominees Limited (NZSF), securing an important vote in favour of the deal.
NZSF holds about 19.9% of the New Zealand company's shares.
The fund manager said a few other Metlifecare shareholders collectively representing around 22% of ownership had also indicated their intention to vote for the deal.
($1 = 0.8933 euros)
(Reporting by Rashmi Ashok in Bengaluru; additional reporting by Shriya Ramakrishnan; editing by Nick Macfie and Gerry Doyle)