The buyer of the Smiles Group assets will raise the bid for Pacific Smiles

The buyer of the Smiles Group assets will raise the bid for Pacific Smiles


Partner of Pacific Smiles (ASX: PSQ). The capital of Genesis has improved its recommendation to take to the dental group for 25 percent by putting an offer on the table valuing the target at about $279 million, and the board seems more receptive this time.

In December 2023 Genesis paid $223 million to buy Pacific Smiles, in a move that would add to its Impression Dental Group business created from assets taken from a failed dental practice at its Gold Coast headquarters. Smile Together in 2021, with various acquisitions since then in QLD, NSW and Victoria.

Pacific Smiles co-founder and major shareholder Dr. Alex Abrahams was also in the running to acquire Smiles’ assets with the backing of a Canadian pension fund, but they eventually lost to Genesis.

With this background, and knowing how much Pacific Smiles shares have fallen from a high of nearly $3 per share at the end of 2021, the Pacific Smiles board rejected Genesis’ initial offer of $1.40 per share, describing it as an “opportunity ” and. underestimating the company significantly.

But Pacific Smiles management gave Genesis limited access to non-public information to see if it would lead to an improved version. At the end of January, as a major sign of its commitment, Genesis bought 19.9 percent of the issued capital in the company, and today it has made a non-binding proposal of $ 1.75 in cash per share.

If the parties can enter into a legal agreement for the implementation of the plan that is worth at least $1.75 per share, the board of Pacific Smiles intends to recommend that the shareholders vote in favor of the proposed transaction unless a higher offer is received or an independent expert concludes. not in the interest of the shareholders.

Pacific Smiles and Genesis Capital have entered into a memorandum of understanding that provides a framework for the due diligence process, and the Pacific Smiles board has agreed to limited reimbursement conditions.

“The board intends to work with Genesis Capital to understand and develop a viable option for Pacific Smiles shareholders to elect to place their shares in unlisted equity in line with Genesis Capital’s due diligence,” Pacific Smiles said in an announcement to the ASX.

“In its entirety, the board has yet to comment on this potential aspect of the offer.

“There is no certainty that the revised Guidance proposal or the entry of the process document will result in the transaction of the proposed terms or at all.

The suitor’s investment in January came shortly after Pacific Smiles’ new CEO and managing director Andrew Vidler began his new role, having previously worked as executive retail manager at Wesfarmers Health, including responsibility for Priceline and Priceline Pharmacy.

A month into Genesis Capital’s tenure as the majority shareholder in Pacific Smiles, the company revealed positive half-year results of a 51.7 percent increase in underlying revenue to $13.9 million and a 10.4 percent rise in patient fees to $147.1 million. The company expects at least $293 million in patient fees for the full year, with an EBITDA base of $26-28 million.

“I have joined Pacific Smiles during a period of transition,” Vidler said on February 27.

“What I see is a company that is well positioned for growth as it continues to reap the benefits of a massive investment program over the past three years.

“This is evident in today’s results, with the company positioned for strong earnings growth and a very strong bottom line. These results, along with strong cash flow and net cash position, support the dividend payout announced today. in a strong position for setting a strategic path for the company’s growth.”

At press time, PSQ shares were up 8.72 percent at $1.62.

Get our daily business news

Sign up for our free email news updates.