Bidding war for takeover target Pacific Smiles heats up with counter-offer from National Dental Care

Takeover target Pacific Smiles has again backflipped on the offer it now deems superior from rival bidders National Dental Care and Genesis Capital.

Pacific Smiles on Thursday informed the market it had received a counter-offer from National Dental Care of $2.05 a share, which it now deemed superior, one day after the east coast dental services operator backed Genesis’ $1.90 a share bid.

In its counter-proposal lobbed on Thursday, National Dental Care is also offering no ticking fee and a corresponding increase to the break fee under the matching rights process in a complex scheme implementation deed.

The board of Pacific Smiles — which operates 136 dental clinics around Australia — had recommended shareholders accept National Dental Care’s previous $1.91 a share cash offer before Genesis on Monday lobbed a revised proposal at $1.90 a share, with a scrip and cash option.

Pacific Smiles on Thursday said its board had determined National Dental Care’s counter-proposal “would produce a superior outcome to shareholders as a whole when compared to the Genesis revised proposal”.

Pacific Smiles directors are now recommending shareholders vote in favour of National Dental Care’s offer at a scheme meeting re-scheduled to August 8.

“Pacific Smiles directors unanimously recommend that all Pacific Smiles shareholders vote in favour of the scheme resolution to approve the NDC scheme under the NDC counterproposal, subject only to no superior proposal emerging and the independent expert not withdrawing or adversely changing its conclusion,” Pacific Smiles said.

Genesis partner Michael Caristo said it still intended to vote against National Dental Care’s proposal.

“We invested because we saw long term value in the business that is yet to be unlocked, and we believe that there may be other shareholders who share this view,” he said.

“Our proposal provides shareholders with the option to participate in this value creation opportunity.

“If the NDC scheme fails, we will continue to pursue our proposal with a view to it being made available to shareholders.”

Pacific Smiles has already knocked back a $223 million takeover offer from Genesis, which holds a 19.9 per cent stake in the Newcastle-based company. The offer at the time was described as “opportunistic and materially undervalues Pacific Smiles”.

Shares in Pacific Smiles were up 6.88 per cent to $2.02 at the close.