Monash IVF board considers improved takeover bid after rejecting previous Washington H. Soul Pattinson offer

Monash IVF has received an improved takeover bid from Washington H. Soul Pattinson and Genesis Capital Investment Management, with its suitors setting a short eight-day deadline for a board response. Shares in the pioneering reproductive healthcare company leapt on the back of the offer, up almost 16 per cent to 77¢ in morning trade on Monday. The consortium upped its bid to 90¢ a share, valuing the target at $311 million, up from 80¢ in November. That was rejected by Monash’s board as opportunistic and a substantial discount to comparable IVF transactions in the Australian market. Genesis and WHSP said the new proposal was the most it was prepared to offer — unless a competing bid emerged — and gave Monash until close of business on Tuesday next week to respond. Monash said it was assessing the proposal, getting advice from financial adviser Macquarie Capital and legal adviser Clayton Utz. Genesis and WHSP are the biggest shareholders in Monash, holding a stake of 19.6 per cent, and asked it to engage on an exclusive basis during four weeks of due diligence and transaction negotiations. Ord Minnett issued a buy recommendation on the back of the news, saying the timing remained opportunistic amid cyclical headwinds and suppressed earnings for Monash. “We believe MVF shareholders will be keen to see a deal get done given the near-term outlook for the business/uncertainty associated with the turnaround,” senior research analyst Tom Godfrey said. Mr Godfrey said a stronger outcome would need an interloper like Spain-based reproductive medicine giant IVI RMA Global, which did not yet have direct exposure to the Australian IVF market. A competing bid would potentially push an offer price up to $1 a share, he said. Two embryo implant mix-ups in Victoria and Queensland sent Monash shares tumbling last year. The first incident emerged in April and involved a woman giving birth to a stranger’s child. Then in June, a woman had her own embryo implanted, not her partner’s embryo as planned. The company refused to publicly release an independent review into the incidents, only saying: “Both cases involved non-standard IVF treatments and circumstances that would not arise in the vast majority of IVF procedures”. Michael Knaap resigned as chief executive two days after the second scandal was revealed. His permanent replacement, cardiothoracic surgeon Victoria Atkinson, took the helm in January. Monash pioneered the world’s first IVF pregnancy in the 1970s. Genesis solely invests in healthcare while WHSP, once a major Australian pharmacy business, invests across a range of industries and asset classes.