By Rishav Chatterjee
(Reuters) -Australia's InvoCare Ltd said on Wednesday it has agreed to a lower takeover offer from U.S. private-equity firm TPG Global, valuing the funeral service provider at A$1.8 billion ($1.18 billion) following exclusive due diligence.
TPG made an all-cash offer of A$12.70 per share, down from its previous A$13 bid for the New South Wales-based company and pegged at a 42% premium to the company's closing price on March 6, before the initial offer was placed.
InvoCare's board unanimously recommended its shareholders to vote in favour of the revised proposal.
A TPG spokesperson said the revised price fairly values the business, taking into consideration factors including its subdued performance in the first half of this year and the implications of the current trading conditions on the remainder of the year.
Invocare's shares jumped 6% to A$12.51, coming off a trading halt after the revised offer was announced.
The deal includes a franked special dividend of up to 60 Australian cents per share that the board said represents total implied value of about A$12.96 apiece.
"Invocare is an excellent opportunity as an acquisition for TPG," said Brad Smoling, managing director at Smoling Stockbroking.
The aging demographics in Australia and the surprising increase in mortality in recent years is very positive for Invocare, he added.
Invocare flagged a challenging macro environment, citing that softer market volumes and inflationary pressures have impacted its margins.
The company expects to report earnings before interest, tax, depreciation, and amortization (EBITDA) for the first half in the range of A$61 million to A$63 million, compared with A$68.5 million a year ago.
TPG, which holds a 19.2% stake in InvoCare, had initially approached the target in March with a A$12.65-per-share offer.
($1 = 1.5298 Australian dollars)