Multiplan and Peres repurchase Ontario’s position
Multiplan has announced that it will repurchase a significant portion of the shares owned by the Ontario Teachers Pension Plan — the second largest shareholder of the company, with 18.52% of the capital.
Multiplan will repurchase just over 90 million shares, worth almost R$ 2 billion, while José Isaac Peres — the company’s controlling shareholder with 25% of the capital — will buy another 21.2 million shares, or R$ 470 million.
In April, Ontario had already sold 8.8% of Multiplan in the market. However, the remaining 18.52% was tied to a shareholders’ agreement that imposed a series of restrictions on the sale.
The sale of this stake had to be made to a single buyer, who would be required to adhere to the shareholders’ agreement.
In today’s transaction, Peres relinquished part of his pre-emptive right to the company to enable the operation.
The purchase price will be R$ 22.20 per share, a 16.2% discount compared to the average price of the last 30 trading days. Multiplan stated that with the repurchase, all company shareholders will have their stake increased by 18.46%.
Given this benefit to shareholders and the offer price, Multiplan “assessed and understood that the repurchase is in the interest of both the company and its shareholders,” the company said in a statement.
The repurchase still needs to be approved at a meeting scheduled for October 21. None of the shareholders involved in the operation will be able to vote, leaving the decision to the company’s free float.
If the operation is completed, Peres will increase his stake from 25% to 28.52%.
Multiplan was valued at R$ 15.94 billion on the stock exchange at the close of trading yesterday, with the stock trading at R$ 26.54.
Today, the share price is up 2.7%, at R$ 27.26. Since the beginning of the year, the stock has fallen by 2.16%, but has risen by 17.3% since the low of the year on June 18.
“Among all possible alternatives for the repurchase, this is the one that generates the most return for all shareholders. If Peres had done the entire operation for himself, he would have earned R$ 600 million — considering the price he is paying and the price at which he could resell to a REIT,” said Ricardo Magalhães, the manager of Argucia Capital, which is a shareholder of the company. “In practice, he ‘gave’ R$ 500 million to the market.”
Now, according to Magalhães, “the only thing missing is for Multiplan to sell an asset to show the correct pricing of Multiplan’s shopping malls to take 10. As next steps, Multiplan’s migration to the Novo Mercado, accompanied by the election of more independent directors, would reinforce alignment with best governance practices, raising transparency and commitment to the market.”
Despite the benefits of the operation, it is expected to significantly increase Multiplan’s leverage, which closed the second quarter at 1.4x EBITDA. Multiplan stated that it will seek financing from third parties for the transaction.
Argucia estimates that Multiplan’s leverage will rise to 2.7x EBITDA by the end of 2024 and then fall to 2.3x by the end of 2025.
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.