TPG Capital pulls InvoCare bid off the table



It’s been an interesting month to be watching what is happening in the South Pacific if you are a investor in the death care business.  TPG Capital, a large United States private equity company, made an unsolicited offer for InvoCare, the largest death care provider in Australia and New Zealand about one month ago.


TPG Capital offered what was then a 41% premium on the InvoCare stock price at the time.  As a matter of fact, the weekend before the offer they purchased stock in the open market and now own over 19% of InvoCare stock.  The offering premium was denied by the InvoCare board with an offer to allow TPG Capital to continue to pursue the deal under better terms after TPG Capital was to be offered a limited look at the InvoCare non-public information.


That idea was put to rest by TPG Capital earlier this week when they announced that they were pulling their offering price, which would have amounted to a total price of over  US $ 1.2 billion for InvoCare.  After that announcement earlier this week InvoCare stock dropped about 17%.  And, according to this recent article from Reuter’s, TPG Capital with an ownership interest of over 19%, may ask  for representation on the InvoCare Board of Directors.


According to this article from the Australian Financial Review, “Some brokers, however, think InvoCare is worth well beyond the $12.65 (Australian $) offer from TPG. Morningstar’s Angus Hewitt has described that bid as “too cheap” and told clients that he thinks a fair value is $14.50 per share.”


Again, according to the Australian Financial Review, InvoCare has over 2,000 employees and conducted 40,000 funerals in 2022 along with 26,000 cremations and burials.


Funeral Director Daily take:  I don’t think we have heard the last of this game.  Over the years, it seems to me that once a company is “in play” the shareholders get differing opinions on what to do. . . . and, the last thing that seems to happen is that the company stands pat.


My guess is that in the next 6-month period we will hear more about the InvoCare courtship by TPG Capital. . . .or we will see another suitor enter the fray.


I do think, however, that this offer by TPG Capital is indicative of the growing bullish feelings of the death care business market by the more secular or widespread business world.  I think for a long time the broader market was a little apprehensive of the death care business market because of the climb of cremation which, in many cases, meant lower revenue.  However, I now believe that the market believes that funeral homes have learned how to be profitable in a cremation world and the next tangible point of reference for these investors may very well be the growing number of older citizens who will one day need death care services.


To that point. . . . those that have figured out how to bring profits to cremation heavy businesses may become highly sought after.


More news from the world of Death Care:


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