Australian Aveo accepts Brookfield's US$860m takeover bid

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Canadian investment manager Brookfield is on track to take over Australian-listed senior living operator Aveo Group in a deal worth A$1.27bn (US$860m).

Aveo owns and manages 93 retirement villages comprising about 12,000 units across Australia, as of September 2018.

Aveo has entered into a scheme of implementation with entities controlled by Brookfield, valuing Aveo at $2.195 per share, according to a statement.

The offer, which is unanimously back by Aveo’s board of directors, represents a 28% premium to Aveo’s closing price of $1.71 on February 12 — the day before it announced that it had received numerous non-binding takeover bids as part of its strategic review.

The senior living group announced a strategic review process and established an independent board committee (IBC) in late 2018 to respond to investor interest in the business and received a number of indicative, non-binding bids in January this year.

“The IBC has carefully considered a range of alternatives as part of the strategic review process and widely tested the market with a thorough and comprehensive auction process,” said IBC chairman Walter McDonald.

“Having completed that process, the IBC and full Aveo board have unanimously concluded that in light of Aveo’s short-to-medium term outlook the Brookfield transaction is in the best interests of our securityholders.” 

In early July, Aveo confirmed it had been in takeover talks with Brookfield since May, naming the major real estate investor as its preferred partner.

The senior living group has been hit by the downturn in the Australian property market, with time frames on settlements taking longer than expected.

The firm noted the weak market conditions were negatively impacting prospective buyers who were seeking to settle on their existing properties before moving into senior living accommodation.

Aveo was advised by Merrill Lynch Markets and Herbert Smith Freehills.