Estia Health has announced that it has entered into a Scheme Implementation Agreement with US-based Bain Capital to acquire 100% of its shares at $3.20 a share, five months after the private equity giant first launched a bid for the ASX-listed aged care provider.

If the deal is accepted by shareholders, the investment will mark Bain Capital’s second in Australia's aged care sector: the private equity firm paid more than $50 million to buy West Australian aged care provider Craigcare from sole director John Gillett in February 2017.

If the acquisition goes through, shareholders will receive $3.20 per Estia Health share, less the fully franked $0.12 per share dividend due to be paid, which equates to a 50% premium on the $2.14 the shares were trading at on 21 March 2023, the day before Bain Capital’s initial $3.00 per share bid was announced. 

On 7 June, Bain Capital increased its initial offer to $3.20 per after reviewing non-public Estia Health information. Estia Health then allowed the private equity firm to conduct due diligence, which ended on 27 July 2023. 

Estia Health shares were trading at $3.09 as of 1pm 7 August 2023 – almost a five-year high for the stock.

Shareholders to vote on offer in November

Estia Health is recommending that shareholders accept the offer. 

Estia Health Chair, Dr Gary Weiss, said the Board is “confident as to the outlook for the business” but recognises the offer represents an “attractive premium”.

Estia Health CEO, Sean Bilton, said: “Bain Capital’s interest in Estia Health is a strong endorsement of our strategy to build a market leading aged care provider focused on creating high quality outcomes for our residents and families and an attractive and supportive environment for our employees. 

“We look forward to a partnership that will continue to deliver our core purpose to ‘enrich and celebrate life together’.”

A shareholder meeting will be held in November 2023 to gain the required shareholder approval to go ahead with the sale expected to be completed by the end of this year.

Estia Health has been listed on the ASX since 2014 and is one of Australia's largest residential aged care providers, with 73 homes across NSW, QLD, SA, and VIC.

The stock’s issue price was $5.75 – 44% higher than Bain’s offer price nearly a decade later.

The SOURCE: The three residential care operators that listed on the ASX in 2014 – Estia Health, Regis Healthcare and Japara Healthcare – saw their share prices significantly fall over the last nine years thanks to the aged care sector’s financial and regulatory challenges. But with the number of new aged care beds being built on the decline, Estia Health and its well-positioned portfolio should be ‘rolled gold’ within a few years.