1300 Smiles Limited (ASX: ONT) investors have sent the share price down almost 1% after learning about its pursuit of a potential acquisition.
1300SMILES owns and operates dental practices located across Australia. Dr Daryl Holmes founded the company and began his professional career in the RAAF as a dental officer.
What Is 1300 Smiles Doing?
This morning the Australian Financial Review reported that private equity business BGH Capital is in talks with New Zealand stock exchange listed Abano Healthcare Group Limited (NZX: ABA) to acquire it entirely.
BGH Capital is in exclusive talks with Abano, but the AFR also revealed that 1300 Smiles is keen on Abano’s Maven Dental Group which has 116 practices and it’s apparently the second biggest dental roll-up group in Australia.
1300 Smiles has been slow-and-steady with its acquisitions in recent years, but this acquisition could be a game-changer for the company if it were to go ahead.
The dental company has acknowledged the media reporting this morning and confirmed that it is indeed interested in the Maven Dental Group and it’s in confidential discussions with Abano and it’s conducting due diligence “investigations”.
1300 Smiles stated, “The outcome of the due diligence and negotiations is speculative. Shareholders should note that there is no certainty that any agreement will be reached or that any transaction will eventuate from the current or any future discussions or diligence investigations.”
The company said that a further announcement will be made if the negotiations are completed and result in a binding agreement.
Is The 1300 Smiles Share Price A Buy?
An acquisition of this size could be transformative for 1300 Smiles, but I wouldn’t buy with the expectation that the deal will go ahead, as it seems BGH is in the prime position.
It’s valued at 18 times the 2019 financial year earnings with a fully franked dividend yield of 4.2%. This share price has been drifting lower in recent times, so it could be an opportunistic time to buy, but the growth shares revealed for free in the report below could be even better picks.
[ls_content_block id=”18457″ para=”paragraphs”]
[ls_content_block id=”18380″ para=”paragraphs”]
