Monash IVF Soars 40% After Rejecting $0.80 Takeover: Buy on Momentum or Sell Before Deal Collapses?

Monash IVF (ASX: MVF) surged 40% today to $0.855 after the company’s board unanimously rejected an $0.80-per-share takeover proposal from a consortium led by Genesis Capital and Washington H. Soul Pattinson (ASX: SOL). Shares jumped from Friday’s close of 61 cents, creating a classic M&A arbitrage situation where the stock now trades above the rejected offer. The board labelled the $312 million bid “opportunistic” and said it fails to reflect the company’s market position and recovery trajectory. For investors, the question is whether to bet on a sweetened offer or take profits before the deal potentially falls apart.

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Genesis-Soul Pattinson Consortium Targets Australia’s Largest IVF Provider

The rejected proposal came from a consortium already holding 19.6% of Monash IVF, combining Genesis Capital’s investment expertise with Soul Pattinson’s reputation as one of Australia’s most patient, long-term capital allocators. The $0.80 cash offer values the company at approximately $312 million, representing a 31% premium to Friday’s close, but what the board views as a material discount to fair value.

What makes this rejection significant is the involvement of Soul Pattinson, a century-old investment house known for disciplined capital allocation. Their interest validates Monash IVF’s strategic assets and market position as Australia’s largest assisted reproductive services provider. However, the board’s pushback suggests management sees materially higher value ahead, particularly as operational improvements flow through to financial performance.

The timing is revealing. The consortium’s approach comes after Monash IVF’s share price fell 51.6% over the past year, driven by operational challenges, including IVF errors that led to the former CEO’s departure in June. We believe this positions the bid as an attempt to capture the company at an inflection point, just as the turnaround strategy begins delivering results.

Why the Board Rejected: Valuation Multiple Shows Material Discount

The board’s rejection centres on valuation metrics. At $0.80 per share, the offer implies an enterprise value-to-EBITDA multiple of 7.7x based on FY25 forecasts. The board, advised by Macquarie Capital, considers this a “substantial discount to comparable IVF transactions in the Australian market,” where recent unlisted deals have been struck at 12-15x multiples.

This suggests the consortium’s bid undervalues Monash IVF by roughly 40-50% compared to peer transactions. For context, Swedish fertility peer Vitrolife trades at 23x EV/EBITDA, more than triple Monash IVF’s implied valuation under the rejected offer. While international comparisons aren’t perfect, the gap highlights how depressed Monash IVF’s valuation has become.

The board’s confidence in rejecting the offer indicates management sees improving fundamentals that justify holding out. Operational efficiencies from the past 18 months are beginning to flow through, and the company has cleared major legal overhangs, including a recent class action settlement. This positions Monash IVF for a cleaner growth phase, which the 7.7x multiple fails to capture.

The Investor’s Takeaway

Today’s 40% surge creates a textbook M&A arbitrage situation. The stock now trades at $0.855, well above the rejected $0.80 offer, indicating the market expects either a higher bid or competing interest from other parties.

For investors considering the opportunity:

• Bull case: Soul Pattinson rarely walks away from strategic investments without follow-up. The consortium already owns 19.6%, suggesting serious long-term interest. A sweetened offer in the $0.90-$1.00 range (implying 10-12x EBITDA) could emerge to match peer transaction multiples. The board’s confident rejection suggests they have visibility into improving fundamentals that justify waiting.

• Risk case: If the consortium doesn’t return with an improved offer, shares could quickly retreat towards pre-bid levels around 60-65 cents. The board’s rejection leaves the company valued for a takeover that may not materialise, while operating performance must now justify today’s 85-cent price without M&A support.

At current levels, this appears expensive for new investors unless you believe a higher bid is imminent. The safer play may be watching from the sidelines to see if Genesis and Soul Pattinson return with improved terms in the $0.90-$1.00 range. For existing holders who rode the 40% surge, taking profits near 85 cents locks in substantial gains while avoiding the risk of deal collapse.