ASX-listed Aveo has allowed more time to Canadian investment giant Brookfield Property Group to work up its bid to buy out the $1.1 billion retirement village business.
Earlier this month Aveo, led by Geoff Grady, confirmed the identity of Brookfield as the preferred party it was negotiating with at the culmination of a lengthy strategic review process that began in August last year.
“Significant progress has been made in those negotiations,” Aveo said on Monday.
“On this basis and in good faith, the independent board committee is continuing to engage with Brookfield in order for the parties to conclude their negotiations on the agreements leading to a scheme of arrangement for a whole-of-company transaction.
” There is no certainty that definitive agreements will be entered into, that the indicative proposal will result in an acceptable offer for Aveo security holders or that a transaction will be implemented.”
The company launched the strategic review process in an effort to close the gap between the value of its underlying property and its stock, which had been hammered the previous two years by damaging allegations about its business practices and treatment of residents.
Aveo’s major investor is Singapore-based Mulpha with a 24.4 per cent stake, making it a key stakeholder in the transaction mooted with Brookfield.
Aveo has come under further pressure from the slowdown in the residential market, which has hampered the transition of prospective residents out of their own homes and into Aveo villages.
After a business update in late June, Aveo shares suffered their biggest one-day decline in at least five years when the retirement living company said full-year earnings would more than halve in the full year to June as the weaker residential market prevented clients from selling their own homes and slowed settlements further.
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