$1.8b takeover bid to stop funeral business going six feet under

The business behind Le Pine, White Lady Funerals and Simplicity Funerals is in play after private equity firm TPG Global accumulated 17.8 per cent of InvoCare’s shares and lobbed a non-binding indicative offer.

The overnight raid by TPG has opened the gate to one of the first private equity takeover bids this year. Funeral services business InvoCare told the ASX before the market opened on Tuesday of the offer.

Under TPG’s proposal, InvoCare shareholders will get $12.25 cash per share, adjusted for any additional dividends and capital, if the company’s board agrees to a binding transaction on mutually acceptable terms.

The company’s share price jumped about 35 per cent, to $12.13, in morning trade on the Australian bourse as news of the bid broke, adding about $458 million in value, before falling off slightly. The stock had been languishing as low as $8.91 in the days before TPG appeared on its register.

The company revealed last month it had struggled to hold timely funerals – and was even forced to refer customers to rival parlours to farewell loved ones – as it was hit with cost increases and staffing shortages, pushing it to a $1.8 million loss last year and increasing its attractiveness as a takeover target.

Loading

InvoCare’s chief executive, Olivier Chretien, told shareholders staff shortages had caused delays in funerals around the country and that pandemic-related restrictions had limited access to potential clients.

TPG’s offer is conditional on InvoCare not engaging with third parties during the due diligence period or while negotiating a binding transaction, and on the board supporting the proposal.

InvoCare operates from 272 locations and 17 cemeteries and crematoria in Australia, New Zealand and Singapore, according to IBISWorld figures, and controls about 26.6 per cent of the enlarged funerals, crematoria and cemeteries market.