Japara Healthcare (ASX:JHC) shares have jumped by nearly a quarter in early trade today after the aged care provider received a tentative $278 million takeover offer from a nonprofit competitor.

Little Company of Mary Health Care, operators of the Calvary chain of retirement homes, proposed paying $1.04 a share, a 30 per cent premium to Thursday’s closing price.

“The Japara Board has not yet formed a view on the merits of the Indicative Proposal and is currently considering it in the context of, amongst other things, expected improvements in trading conditions and the Federal Government’s upcoming budget and regulatory response to the Royal Commission into Aged Care Quality and Safety recommendations expected in May 2021,” Japara said.

The sector has been seen as ripe for consolidation with the conclusion of the royal commission and the pandemic receding. In January, listed investment house Washington H Soul Pattinson (ASX:SOL) dropped its $550 million offer for Regis Healthcare (ASX:REG) after it was rejected by Regis’ board.

Japara has 50 aged care homes across five Australian states and in the first half of FY2021 reported a $9.5 million loss on $220 million in revenue.

In a research note, Morgan’s said that the bid price of 9.5 times earnings looked reasonable and that “Japara has a number of strategic shareholders on the register which will make the bidding process interesting.”

At 10.50am, Japara shares were up 23.1 per cent to 98.5c.

 

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