Hometown America drops due diligence condition for Gateway Lifestyle offer

2 July 2018: Hometown America adjusted its takeover bid for Australian retirement village owner Gateway Lifestyle Group (GTY.AX) on Monday, offering to drop due diligence if the target agreed to its A$695 million ($514 million) cash offer.

Hometown said its bid, at A$2.30 cash-per-share, was superior to an identically priced offer from Canadian private equity firm Brookfield Asset Management (BAMa.TO), because Gateway had promised to pay out a 5.35 Australian cents dividend during the bidding contest.

Hometown’s cash offer would slip to A$2.25-a-share if Gateway was unwilling to sign a bid implementation agreement at the higher price. Gateway said it was considering the offer.

The bid implementation deal would contain features including a unanimous commitment by Gateway’s board to recommend the bid, Hometown said.

Gateway agreed to an exclusive due diligence by Brookfield Property Group, a unit of Canadian alternative asset manager Brookfield Asset Management Inc (BAMa.TO), which made a non-binding A$2.30-a-share offer for Gateway on June 21.

Brookfield’s offer trumped an earlier offer from Hometown of A$2.10 per share.

Investing in the retirement sector is viewed by analysts as a means to profit from Australia’s aging population and tap generous government subsidies offered to pensioners.