BGH Capital to take Virtus Health to Takeovers Panel

Under the terms of the exclusivity agreement, Virtus Health cannot talk to any other potential suitors until three weeks after CapVest entered the data room, including its biggest shareholder BGH Capital.

After three weeks, a fiduciary out kicks in, which would allow the company and its advisers to negotiate with any party that has a “genuine competing proposal”.

BGH Capital’s move would suggest it wants the chance to talk to Virtus Health to see whether it could match CapVest’s bid, which would be in the best interests of the IVF provider’s shareholders, and get an auction going.

Instead, Virtus Health gave a leg-up to CapVest, which had the higher indicative offer and a two-headed proposed takeover structure. It also negotiated a $4 million break fee, worth about 0.5 per ecnt of the potential deal size, designed to cover CapVest’s costs.

Should the matter land at the Panel as expected, it is sure to pour fuel on the burning issue of exclusivity agreements, which flared up during the $18 billion battle for AusNet last year.

It also shows BGH Capital’s not going to go down at Virtus Health without a fight.

Jefferies Australia and Gilbert + Tobin helped Virtus Health negotiate the agreement. CapVest has Morgan Stanley and Ashurst helping with its due diligence, while BGH Capital is advised by Allens and UBS.

Virtus shares were trading at $7.28 at lunchtime on Wednesday.