The Greencross Limited (ASX: GXL) share price is up 17% so far after the pet company announced it is entering into a scheme implementation agreement with TPG.
The takeover agreement is with Vermont Aus Pty Ltd, an entity owned by TPG Capital Asia and TPG growth to acquire all of Greencross' shares.
Greencross shareholders will get $5.55 per share, reduced by a dividend. Greencross intends to pay a fully franked dividend of up to $0.21 before the takeover is completed. This means Australian shareholders could receive value of $5.64 per share including the franking credits.
The takeover price represents a 44.5% premium to the one month volume weighted average price (VWAP) of $3.84 up to 9 October 2018. The price is around 18x FY18's earnings, or 10x FY18 enterprise value / EBITDA, which gives Greencross an enterprise value of around $970 million.
Is the takeover likely to go ahead?
It seems so.
The Greencross board unanimously recommend the scheme to shareholders unless a better offer comes in.
The Board believes it's a good offer because of the premium, the attractive acquisition multiples, the certainty of value and the limited conditionality, including not being subject to financing or due diligence.
Greencross Chairman Stuart James said "In reaching our conclusion that the Scheme is in the best interests of shareholder, the Board has consider a number of alternatives, including standalone value creation opportunities and alternative proposals from other potentially interested parties.
"Upon assessing the alternatives before it, the Board has unanimously concluded that the Scheme is a compelling option which realises attractive value for our shareholders."
The scheme is likely to be implemented somewhere between March 2019 to June 2019.
If I were a Greencross shareholder I would consider waiting a little bit to see if a better offer comes along and then selling. If no better offer comes along then the money would probably be better invested in shares that can grow more than a few percent over six months, which is the best one could hope for by holding on.
