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Grave decision: Australian funerals giant sold off in $1.8 billion deal

The ASX200 company behind the White Lady and Simplicity brands of funeral homes has agreed to be bought by an US-based private equity firm for $1.8 billion.

Aug 10, 2023, updated Aug 10, 2023
White Lady Funerals are part of an Australian business which will be sold to US investors for $1.8 billion . (AAP Image/Julian Smith)

White Lady Funerals are part of an Australian business which will be sold to US investors for $1.8 billion . (AAP Image/Julian Smith)

InvoCare’s board of directors has signed a deal to be taken over by TPG Capital for $12.70 in cash per share, down from an TPG’s initial offer of $13 per share.

“We believe that the agreed revised price of $12.70 fairly values the business, taking into consideration our overall due diligence findings,” a TPG spokesperson said.

Those findings involve a subdued first-half performance, with a negative impact on margins, operating leverage and net debt, the spokesperson said.

InvoCare said on Wednesday while its financials were still being audited it expected to announce operating earnings of $61 million to $63 million for the six months to June 30, down from $68.5 million a year ago.

The near-term macro-environment remained challenging and market volumes softened in the second quarter, InvoCare said.

The offer values InvoCare’s business at $2.2 billion, not including its debt and $182.5m in lease liabilities.

Formed in 2001, Sydney-based InvoCare operates more than 290 funeral home locations in Australia, New Zealand and Singapore.

It has more than 40 local brands in Australia, in addition to its national brands, along with 15 cemeteries and crematoria in NSW and Queensland.

The takeover offer is expected to be put to InvoCare shareholders for approval in October and could be implemented as soon as November.

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InvoCare chairman Bart Vogel said the company’s board was unanimous that the transaction was in the best interest of shareholders, representing a 42 per cent premium to InvoCare’s share price from before the takeover approach was first reported in March.

At 1.48pm, IVC shares were up 5.9 per cent to $12.48.

The deal is the second private equity takeover in Australia this week and is set to further shrink the local bourse, which has had a decline in new listings given the uncertainty posed by rising interest rates.

On Monday, aged care operator Estia Health, an ASX300 component, agreed to be taken over by Bain Capital for $838 million.

A private equity consortium is also progressing with gaining the regulatory approvals needed for its $15.4 billion takeover of Origin Energy.

That consortium is led by Canadian asset giant Brookfield, which last year took over Victorian electricity infrastructure company AusNet for $10.2 billion.

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