Eureka, the Over 55s rental village operator, which announced a profit after tax of $6.3 million (down from $7.8 million in 1H23) in its 1H24 financial report, says an improved offer by Aspen Group is inadequate and undervalues the business.
Now the operator has appointed financial experts to give shareholders an opinion if Aspen’s improved offer is “fair and reasonable”.
On 23 January, Aspen announced an improved takeover offer for 0.27 Aspen Group securities per share of Eureka, which represents an implied price of 0.44 per Eureka share, to the ASX. Eureka shares were trading at 0.46 at time of publication.
“Aspen’s current offer is considered inadequate by the Board and undervalues Eureka, as the Implied Bid Price represents either a discount or no meaningful premium over Eureka’s share price at any time in the past 12 months,” Eureka Executive Chairman Murray Boyte (pictured) said on Friday morning.
"Based on Eureka's 1H24 earnings and outlook the Board also believes the Proposed Bid undervalues the underlying strength of Eureka's business model and its future growth potential."
Eureka on Friday announced a 19% increase in underlying EBITDA, or earnings before interest, taxes, depreciation, and amortization, to $7.1 million for the half year to 31 December 2023 over the previous year, driven by organic growth in existing villages, the acquisitions of Ingenia Gardens' WA rental villages and improved maintainable earnings.
95% of Eureka's 1,884 residents (254 in a joint venture) receive the full entitlement of Australian Government support payments, such as the Age Pension and Commonwealth Rent Assistance, which is $1,282 per fortnight for a single person and $1,827 for couples. Occupancy is stable at 98%.
"Eureka has an attractive future as an independent pure play affordable senior accommodation provider and is well placed to create long term, sustainable value for shareholders," Murray said.
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