Is it a farewell from Aveo to Canadian investment giant, Brookfield? Nope, it seems the ASX listed aged care operator and Brookfield are moving closer to completing a deal first revealed in a statement issued on July 4.
A busy day yesterday for retirement village operator Aveo Group, with the group warning underlying profits will fall to $50 million cutting its annual distribution to unitholders in half and revealing that it has received a possible takeover offer from an unnamed party, believed to be Canadian investor, Brookfield, or US group, Blackstone.
Morgan Stanley believes there are signs the worst is behind the company, amid encouraging early trading in 2018. First half underlying net profit was -32.7% below the prior corresponding half, a result of reduced customer interest and higher marketing costs related to media scrutiny.
The company has denied claims of overcharging and excessive complaints against the group, in the wake of media reports regarding allegations it used exorbitant fees and complex contracts to increase profits.
The share price has fallen around 10% from its highs but Morgans expects a strong result, which creates an attractive accumulation point. The broker believes the risk lies to the upside if strong momentum in the non-retirement sales/margins has continued throughout the second half.