July 4, 2019 / 1:23 AM / 5 months ago

UPDATE 2-Australia's Aveo reveals Canada's Brookfield as bidder

* Brookfield revealed as party behind takeover bid

* Aveo shares rise as much as 5.9% after announcement

* Brookfield’s takeover talks “opportunistic” - analyst (Rewrites copy, adds analyst comment)

By Aditya Soni

July 4 (Reuters) - Australia’s Aveo Group revealed on Thursday it had received a takeover offer from Canada’s Brookfield Asset Management Inc for the A$1.2 billion ($844.4 million) retirement-home operator, ending weeks of speculation.

The Sydney-based firm last month said a “preferred party” had made a confidential, non-binding and conditional indicative takeover proposal.

The buy would give Brookfield a large slice of Australia’s aged-care industry, which has seen its valuations slide to attractive levels in the wake of a public inquiry into mistreatment and abuse of residents in aged-care facilities.

Allegations of assaults on patients, predatory pricing and poor care prompted Australia’s government to announce the ongoing inquiry into the A$20 billion ($14 billion) industry.

The worst property downturn in a generation has also weighed on Aveo as its potential customers hold up decisions to sell their homes and move to retirement villages due to weakness in house prices. This prompted the company to more than halve its annual profit forecast last month.

The cheapened price offers Brookfield an easy opportunity to strengthen its presence in Australia.

“Opportunistic would be the word to describe Brookfield’s engagement. We do think it is a sector that has a lot of economic power in the years ahead because of the demographic in Australia and the aging population,” James McGlew, executive director of corporate stock broking at Argonaut said.

Earlier this year, the Canadian firm won a bidding war for Australian hospital operator Healthscope Ltd with a A$4.35 billion takeover offer.

Shares of Aveo, which runs over 90 retirement homes across Australia, rose their most in two months after the announcement.

“Aveo continues to negotiate with Brookfield in respect of its indicative proposal with a view to entering into definitive agreements leading to a scheme of arrangement to give effect to the indicative proposal,” the firm said in a statement.

Brookfield was not immediately available to comment.

$1 = 1.4211 Australian dollars Reporting by Aditya Soni and Aby Jose Koilparambil in Bengaluru; Additional Reporting by Devika Syamnath; Editing by Stephen Coates

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