InvoCare rejects takeover bid. . . . Dignity plc company credit downgraded



This article from Business News Australia, that came out on Monday, March 27, indicates that Australia’s largest provider of death care services, InvoCare has rejected a non-solicited offer of  $Aus 1.8 billion (United States $1.2 billion) from American private equity player TPG Global made earlier this month.


According to the article, TPG Global holds a 19.9% interest in InvoCare, but InvoCare will require the company to return with a more lucrative proposal if any full takeover is to proceed.  In order to allow TPG Global more information to do that InvoCare “has offered to provide access to limited, non-public information on a non-exclusive basis.”


That information will be subject to certain conditions including the signing of an appropriate confidentiality and standstill agreement, according to the article.


Also, according to the article, “Until a more tantalizing bid is put forward, the InvoCare Board still recommends shareholders take no action in relation to the initial proposal.”



In January a take private offer not unlike TPG Global’s offer for InvoCare was accepted by the 2nd largest death care provider in Great Britain, Dignity plc.  You can read about that transaction here.


Since Dignity plc is still trading on the stock exchanges I’m assuming that that takeover has not yet been consummated even though it has been announced.


However, only a week or so ago in Great Britain, credit rating firm Fitch downgraded the credit ratings of Dignity Finance plc.  “Dignity Finance Plc is a financing vehicle for the securitization comprising 749 funeral homes and 44 crematoria as at September 2022. The Dignity group is the UK’s second-largest provider of funeral services and the largest provider of crematoria services.”


You can see the Fitch Ratings notice on that action here.  Here’s what the Fitch Ratings say about the latest opinion:


“The downgrades reflect Dignity’s weakening cash flow and significant financial underperformance to our previous forecast. In our view, more price-conscious consumers, greater competition and the company’s strategy of re-gaining market share have materially reduced its ability to increase prices. . . . . . The acceleration of price competition and Dignity’s response with an alternative low-priced range of products and more flexible packages highlight the growing exposure of the funeral business to discretionary spending and behavioural changes. . . . In addition, the pandemic has facilitated the trend towards unattended funerals and simplified cremations, which together with increased price competition and transparency, represent structural changes to the sector that weaken Dignity’s operating environment.”


Funeral Director Daily take:   If there has ever been a concern that the funeral/cremation or “Death Care” business is small potatoes, these articles and proposed transactions should debunk that theory.  The civilized world is growing its population and these larger private equity companies know that and, in a sense, “want in on the action”.  And, sometimes they see value where others don’t.


On the other hand, the credit ratings downgrade on Dignity plc is eye opening.  We’ve seen “it” happening everywhere, but Fitch now tells us that they have seen “it” also.   The “it’ being “behavioral and structural changes” in the trends of the death care sector which now include “unattended funerals and simplified cremations” and “increased price competition” which, it appears, they believe, and tell us, will have a negative effect on death care business profitability moving forward.


More news from the world of Death Care:


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