Canadian investment giant Brookfield is moving ahead in its bid to acquire Aveo Group, with a deal expected to be struck as early as this month.
The update comes after Brookfield was outed as the likely suitor for the retirement village operator in early July, with Aveo naming Brookfield as its favoured party during takeover talks.
In an ASX statement on Monday, Aveo said “significant progress” had been made in its negotiations with Brookfield.
“Aveo and the preferred party have continued to negotiate with a view to entering into definitive agreements leading to a scheme of arrangement,” the company said in a statement.
Monday’s deadline was flagged by Aveo in its mid-year update, with the company declaring that if the definitive agreements leading to a scheme of arrangement cannot be formalised by Monday, 22 July then the entire process would be called off.
It is now likely that Brookfield will finalise its offer sooner rather than later, despite concerns that 24.4 per cent shareholder, Mulpha Group, was not prepared for the takeover.
The aged care operator, which houses more than 13,000 residents across 90 villages, established an independent board to fend bids for the company in late 2018.
Shortlisted parties were invited into a second stage process in February 2019, with Brookfield emerging as the preferred suitor in June.
Australia’s $20 billion aged care sector has faced a significant headwinds in 2019, with the royal commission into the sector adding to the weight of the residential downturn.
Aveo’s share price took a major hit in June after it more than halved its underlying profit from $127.2 million to $50 million, blaming a deteriorating residential property market and settlement uncertainty.
The group said that market headwinds had an “adverse impact on the timing of prospective residents who are seeking to settle on their existing properties and move into seniors living”.
The sales process for Aveo is being managed by Merrill Lynch.
