UK social care provider CareTech will be taken private by its co-founders, in a cash and debt bid that values the group at £1.2bn.
Shareholders in Hertfordshire-based CareTech, which provides housing and care services for people with disabilities, will receive 750p a share — a 28 per cent premium to the stock’s closing price on March 4, the last trading day before the offer period began.
The successful approach from Amalfi, a consortium led by CareTech co-founders Haroon and Farouq Sheikh, trumps an offer in April from private equity group Dbay, also worth 750p per share.
The Sheikh brothers founded CareTech in 1993 and the company was admitted to Aim in 2005. The business has 160 properties and almost 5,000 places to support adults and children with complex needs in the UK.
The group, which is the UK’s biggest provider of private children’s homes, generated £490mn in revenue for its latest full-year earnings statement, up 13.8 per cent from a year earlier, on underlying pre-tax profit of £68.3mn. Its property portfolio is valued at close to £1bn.
Providers of children’s care have benefited from rising fees and profits, as demand has grown during the pandemic and councils are legally obliged to find care for children that need it.
The CareTech bidding group believes private ownership will allow its management to focus on “operating the business for the long-term” and expand it.
The company said it had received support from investors representing 50.8 per cent of CareTech’s shares, including Sheikh Group’s 13.1 per cent stake.
The shares rose to 739p in trading on Monday.
The cash offer will be partly financed through £258mn to be provided via debt by THCP Advisory.
“Both Haroon and myself as founders believe that our offer for CareTech is in the best interests of all stakeholders,” said Farouq Sheikh in a statement on Monday.
“Shareholders will receive immediate value in the form of a significant premium to the share price before the offer was announced or the ability to co-invest with us for the long-term.”