Jeremy Hutton: Milford Asset Management Equities Analyst on the impact of the Warehouse takeover on the NZX

Experts have revealed how the market reacted to the proposed takeover of the Warehouse.

An Australian private equity firm has made a formal takeover offer to The Warehouse Group - which would give founder Sir Stephen Tindall greater control.

Milford Asset Management's Jeremy Hutton explains how this played out on the NZX.

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Episode Transcript

Speaker 1 (00:00):
Jeremy Hasson of Milford Acid Managements with us a Jeremy Evening, Heather,
And it's been a busy start to the week on
the NZX with those takeover offers. We've got the warehouse
and we've got our Vida and play talk me through it.

Speaker 2 (00:12):
Yeah, we had the warehouse yesterday, which our listeners you know,
definitely would have seen in the press. But also local
retirement village operator our Vita got a significant bid two
on Monday, and that bid came from a large infrastructure
slash private equity investor called Stone Peak, and the offer
was at a significant premium sixty five percent higher than
the Friday closed price, which you know, some investors will

(00:34):
be pretty happy about, but it is still down from
the stocks peak in mid twenty twenty one, you know,
when the price was around two dollars ten, So some
investors might be a little bit disappointed the price couldn't
get back or wasn't given the chance to get back
to this level. But it is highly likely that this
deal at a dollar seventy goes through. You know, there
were limited conditions. You know, diligence and financing is complete

(00:58):
and there's just the OAO and if you hold a
vote to occur. So the company is expecting our completion
in two four of this year.

Speaker 1 (01:06):
So what is it that these global private equity players
are seeing in the retirement sector that they think is
so attractive.

Speaker 2 (01:13):
Yeah, interestingly, now, this is the second takeover offer of
a listed retirement player, following the MetLife Care deal in
twenty twenty, which was brought by another global private equity
fund called EQT Capital. And we all know about the
demographic wave, the aging population that's coming through New Zealand,
and retirement villages are pretty well established products now, they're

(01:35):
well known, but the penetration still has room increase. So
you know, that gives quite a bit of growth in
the sector in these companies which private equity does really
tend to like. And arguably, you know, it's a good
time to buy as well. Valuations are attractive. The sector
has been very depressed for the past few years with
the slow housing market, so it's clear that some overseas

(01:57):
investors are looking at New Zealand, they're seeing opportunities and
perhaps they're calling the bottom even in seeing a good
pathway up from here.

Speaker 1 (02:05):
Yeah, I mean, as a result of this obviously we've
had some positive price reactions and the other retirement names
as well. Do you reckon that's going to continue?

Speaker 2 (02:12):
Yeah, it's hard to isolate solely if this is due
to takeover offer. You know, some of the more under
pressures sectors on the inxet X, like retail, construction, retirement.
You know, they've all rallied very strongly posts the RBNZ
of a statement two weeks ago, but this takeover news
is likely given the list of pairs retirement pairs another

(02:33):
leg up and Oceania, which is the smallest retirement name,
is up a whopping forty seven percent so far this month,
and the larger pairs Rhyman and Somerset It both lot
pretty sharply as well. But I think this is an
example again of the market moving share prices ahead of
financial results. I think the results for the sector will
be still pretty depressed for the next six to twelve months,

(02:57):
but the sector does have a strong link to house
prices and health sentiment and activity, so the potential interest
rate cups will help eventually. So it feels like a
little bit of a relief rally for now. But the
takeover interest has shown the market that valuations had fallen
a bit too much perhaps, and there are some good
deals out.

Speaker 1 (03:17):
There, good stuff. Hey, Jeremy, thanks for talking us, Sir
Jeremy Houston of Milford Asset Management. For more from Hither
Duplessy Allen Drive, listen live to news talks. It'd be
from four pm weekdays, or follow the podcast on iHeartRadio.