(Reuters) - Australia’s Aveo Group AOG.AX on Thursday confirmed that the real estate investment arm of Canada’s Brookfield Asset Management Inc (BAMa.TO) is the preferred party with which the retirement-home operator is holding takeover talks.
Aveo shares climbed as much as 5.9% in early trade, their biggest intraday percentage gain in more than two months, following 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.
The Sydney-based firm last month said a “preferred party” had made a confidential, non-binding and conditional indicative takeover proposal.
Aged-care firms in Australia are under pressure from a downturn in the property market and an ongoing independent public inquiry into abuse and mistreatment in the sector.
Aveo expects annual profit to more than halve due to the weak property market.
Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Stephen Coates