Good evening,

It is fangs out at Crescent Capital. Street Talk understands the healthcare-focused private equity firm is checking out in-play dental clinic operator Pacific Smiles.

The ASX-listed company knocked back a $223 million buyout proposal from Genesis Capital in December but left the door open for the firm which similarly specialises in healthcare to return if it can muster a higher offer. At the time, the board said Genesis’ $1.40-a-share offer was “opportunistic and materially undervalues” the company.

Of note, Street Talk is not suggesting Crescent Capital has tabled an offer to the board or made a formal approach, just that the Michael Alscher-led buyout firm is considering a proposal.

Pacific Smiles sunk to as low as 90¢ on November 27, but the shares have since surged past the offer price (see chart below). They last traded at $1.44, giving it a $228 million market cap.

Pacific Smiles would be a logical buy for Crescent. It owns 60 practice-strong dental roll-up National Dental Care – a nationwide operation that’s flirted with an ASX float on several occasions. It’s also had its claws in primary care group 24-7 Healthcare and has made a motza from its investments in pathology, clinical research and allied health companies.

But gaining control of Pacific Smiles could be like pulling teeth. Genesis looms large on the register, snapping up 18.75 per cent of the company alongside its bid. It upped its stake to 19.9 per cent on Wednesday. Founder Alex Abrahams controls 12.58 per cent, co-founder Alison Hughes another 9.9 per cent and MA Financial holds 11.13 per cent. Health insurer HBF Health holds just over 10 per cent, which it picked up when shares were trading above $2.50 a piece.

The board is working with Greenhill & Co on defence – and has been since it was forced to fend off an activist campaign from Abrahams in late 2022. Gilbert + Tobin is its legal adviser. Genesis is advised by Jarden and Clifford Chance.

Read the full story and more on the Street Talk page.

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