Crescent Capital investee National Dental Care appears set to acquire larger listed dental practices network, Pacific Smiles Group (ASX: PSQ), assuming rival bidder Genesis Capital does not substantially improve its latest offer.

Pacific Smiles Group has entered into a scheme implementation deed under which National Dental Care will acquire 100% of Pacific Smiles’ shares by way of a scheme of arrangement.

The conditional offer of $1.90 cash values Pacific Smiles at $303 million.

Pacific Smiles’ board has unanimously recommended shareholders to vote in favour of the deal at a forthcoming scheme meeting, subject to no superior proposal emerging and an independent expert concluding the scheme is in the best interests of shareholders.

In a 29 April announcement, Pacific Smiles said its board believed the offer should be attractive to shareholders as it represented a 59% premium to the $1.20, 15 December closing price for Pacific Smiles shares, the day before it announced an indicative proposal from Genesis.

The National Dental Care bid is 35.7% higher than Genesis’ initial offer of $1.40 per share and 8.6% higher than Genesis’ revised offer of $1.75 per share announced on 19 March.

Pacific Smiles said then that it had agreed to provide non-exclusive due diligence to Genesis and, subject to no superior proposal emerging, intended to recommend shareholders to vote in favour of an offer of at least $1.75 a share.

If National Dental Care acquires Pacific Smiles, Genesis will still be well rewarded.

Genesis’ initial bid was reported by Pacific Smiles on 18 December. Pacific Smiles said then that in early December, Genesis had acquired an economic interest in 29.9 million of its shares,18.75% of the company. Control of the shares was through a cash-settled total return swap arrangement at an average price of $1.3977 per share.

In an update on 24 January, Genesis informed Pacific Smiles that its subsidiary Beam Investments had on 23 January increased its economic interest in Pacific Smiles by 1,836,117 shares with the result that it held an economic interest in 31.75 million shares lifting its holding to a 19.90% economic interest through its cash-settled total return swap arrangement.

Pacific Smiles shares were trading at around $1.88 on the afternoon of 29 April.

Pacific Smiles operates more than 120 Pacific Smiles and nib dental centres on the East Coast of Australia and manages the operation of HBF Dental Centres in Western Australia.

National Dental Care operates an Australia-wide network of 88 dental practices.

Greenhill and Co is Pacific Smiles’ financial adviser and Gilbert + Tobin its legal adviser.

Image: Pacific Smiles’ Coomera, Queensland, dental practice.