Good to see a 175k buyer at 1.145. The below is part of an article in today's AFR. It says that either of the two non-for-profit bidders will save $16m p.a. in wages. Plus they would be buying the assets at well under the replacement cost. Also that it would give the immediate geographical expansion in Victoria. "Beaten-down aged care assets are seen as cheap, but not as cheap as last year before the federal budget outlined the government would spend $17.7 billion on the fixing the sector in response to the royal commission findings.Still, there is plenty of competition for assets already with M&A heating up with the third largest listed player, Japara Healthcare, in play.Bolton Clarke Group in June offered $326 million for Japara, topping an earlier sweetened bid of $320 million from Calvary Healthcare. Binding bids are due by July 30 for these these two non-for-profit suitors. This status gives them a big leg up in terms of not paying payroll tax, which in Japara’s case, would be equivalent to saving about $16 million on its wages bill in the financial year ended June 30. Not-for-profit groups are also generally exempt from stamp duty, saving the successful bidder tens of millions on acquisition, and they gain from being exempt from fringe benefits tax which allows them to enhance staff salaries in a tax effective way without increasing dollars paid.At current bid levels, Japara bidders are paying about $245,000 per bed, well under the replacement cost for developing a new aged care bed. Japara has 33 of its 50 homes in Victoria and is the largest operator of aged care in Victoria. An acquisition would give either party instant scale in aged care in Victoria complementing their existing operations."
JHC Price at posting:
$1.15 Sentiment: Buy Disclosure: Held
