Stonepeak Acquires New Zealand’s Arvida Group in a $746 Million Deal

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Stonepeak, a prominent U.S. private equity firm, has announced the acquisition of New Zealand’s Arvida Group (ARV.NZ) for NZ$1.24 billion (approximately $745.74 million), excluding debt. This news sent Arvida’s share price soaring by nearly 60% on Monday, reaching its highest point in over two years.

A Compelling Investment Opportunity

Stonepeak, holding assets valued around $71.2 billion, is offering NZ$1.70 per Arvida share. This represents a substantial 65% premium compared to Arvida’s closing price on the previous Friday. The all-cash offer has received the full backing of Arvida’s board. Notably, the deal is not subject to any financing or due diligence contingencies, signifying a high degree of confidence and swift completion on both sides.

Taking into account the debt factor, Arvida’s enterprise value is estimated to be $1.25 billion, according to Stonepeak’s statement. Darren Keogh, a senior managing director at Stonepeak, highlighted the key factors driving the acquisition. He described Arvida’s established portfolio, promising development pipeline, and the long-term growth potential fueled by New Zealand’s aging population as a “compelling investment opportunity” that aligns perfectly with their Asia infrastructure strategy.

Market Reaction and Potential Industry Consolidation

The news of the acquisition triggered a surge in Arvida’s share price. It rose by a staggering 57.3%, reaching NZ$1.62, its highest level since June 3rd, 2022. This positive sentiment rippled through the sector, with shares of Arvida’s competitors, Ryman Healthcare (RYM.NZ) and Summerset (SUM.NZ), also experiencing significant jumps. Ryman Healthcare’s shares climbed by 7.7%, while Summerset’s witnessed a 2.25% increase on Monday. This collective rise in share prices suggests that investors anticipate further consolidation within the aged care sector in New Zealand.

A Sweetener After a Previous Rejection

Interestingly, this isn’t the first time Arvida has received a takeover offer. Last December, the company revealed an approach from an unnamed offshore infrastructure fund, proposing a similar NZ$1.70 per share acquisition. However, Arvida rejected that offer due to its highly conditional nature and concerns about shareholder value.

In contrast, Arvida’s board readily accepted Stonepeak’s offer, citing its attractive price point and high certainty of completion. While Reuters could not definitively confirm if Stonepeak was the same entity that made the previous bid, the timing and terms suggest a strong possibility.

Looking Ahead

Stonepeak’s acquisition of Arvida signifies a significant development in New Zealand’s aged care sector. With a growing aging population, the industry is expected to experience continued demand. This move positions Stonepeak to capitalize on this trend and leverage Arvida’s established presence and future development plans. The coming months will likely reveal more details about the integration process and Stonepeak’s long-term vision for Arvida.