ACCC watching Prime time at BBC

But Prime and BBC say competition is unlikely to be an issue in a sector still dominated by not-for-profit organisations.

Prime wants to acquire 40% of BBC through a one-for-one scrip offer before pursuing a full merger. That would create the largest retirement homes owner and operator, with about 10,500 units and 2300 aged-care beds, with 5500 units to be built over the next five years.

David Williams, managing director of Kidder Williams, Prime Trust's responsible entity, says a merged company would still only control about 15% of the market. He said Prime Trust was "delighted" the Australian Competition and Consumer Commission was taking an interest in the sector.

"I think (the ACCC review) shows the growing importance of the industry - the more focus the better," he said.

BBC is buying its management rights back from parent company Babcock & Brown and has opened a data room for potential buyers.

Babcock & Brown managing director John Martin said Prime's one-for-one scrip offer last week was an attempt to "spoil" an orderly sale of the business. But he said BBC already leased or managed 25 of Prime's villages, and the rest were located in different parts of Australia.

"It's not as though we'd take their number of units and add it to our number of units," he said. "Even if one of the other big players gets control of ourselves or Prime Trust, what does that mean? I just don't see the ACCC finding that there's any real control problem . I think maybe the ACCC have been put on notice - they've thought, 'Well there's going to be consolidation in the sector, we better pay attention'."

Austock securities analyst Rohan Sundram speculated BBC could also become a more valuable takeover target if it formed a joint venture with rival Aevum, in which it has a 14.4% stake. That would give BBC better exposure to the NSW market, but would not be a competition issue.

"None of the larger private retirement operators possess scale across NSW to the extent that Aevum do," he said. "But that's not to say that Aevum has that much control over that market. It is still a highly fragmented industry."

Research by Jones Lang La Salle's Peter McMullen shows there are about 600 retirement village owners, about 70% of whom own one village only. Not-for-profit organisations own about 65% of villages.

LINK

? www.bbcommunities.com