PHP ups bid for Assura to £1.79bn in recommended takeover deal
PROPERTY
Primary Health Properties (PHP) on Monday raised its offer for a leading UK healthcare real estate investment trust Assura to around £1.79 billion (R43bn).
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Primary Health Properties (PHP) on Monday raised its offer for a leading UK healthcare real estate investment trust Assura to around £1.79 billion (R43bn), securing backing from Assura’s board and paving the way for the creation of a major UK-listed healthcare real estate investment trust (REIT).
Under the revised terms, Assura shareholders will receive 0.3865 new PHP shares and 12.5 pence in cash for each Assura share. They will also receive a special dividend of 0.84 pence, bringing the total implied value to 53.3 pence per share based on PHP’s closing price on June 20. Including previously declared dividends, the offer rises to 55 pence per share.
The increased offer represents a 5.8% premium over a rival bid from Sana BidCom a consortium led by private equity firms KKR and Stonepeak, which had proposed 50.42 pence per Assura share in cash.
Shares in PHP, which are secondary listed on the JSE, fell 5% in morning trade on Monday to R24.70, while Assura, which is also secondary listed on the JSE, shares soared 4.95% to R12.29.
PHP Chair Harry Hyman said, "The PHP board continues to believe in the strong strategic rationale of the combination, which will create a leading healthcare focused listed REIT with the scale and expertise to deliver significant benefits for the shareholders in PHP and Assura. The increased PHP offer, which is expected to deliver earnings accretion to both sets of shareholders, allows Assura shareholders to participate in significant upside compared to crystalising value in cash at an inflexion point in the current economic cycle, and benefit from the combined group's likely long-term rating, continuing capital growth and a growing dividend."
Assura chair Ed Smith said the board had decided to recommend the increased PHP offer after the suitor addressed earlier concerns around financing and disposal plans. “The Assura Board has always been and will remain resolutely focused on carrying out its fiduciary duties,” he said.
The revised offer follows PHP’s original bid announced in May and reflects additional discussions between the two companies, including a planned joint venture for Assura’s private hospital portfolio and progress on refinancing arrangements.
In making its decision, Assura said it also examined the risks flagged earlier in June and held further talks with PHP over its financial structure and asset disposal strategy. PHP has since reassured the Assura board that it is in advanced talks with credible investors to form a joint venture around Assura’s private hospital portfolio and committed to carrying out any disposals in a value-maximising timeline.
Beyond the financial reassurances, Assura said the tie-up offers shareholders the opportunity to remain invested in a stronger, more liquid REIT with a £6bn portfolio and better long-term growth prospects. The board believes the deal will be earnings accretive in the first full year and noted the higher premium to both Assura’s undisturbed share price and the rival consortium’s offer.
With the increased PHP offer also offering immediate value through a cash component and a special dividend, Assura said shareholders will have both near-term liquidity and long-term upside. As a result, the board has withdrawn support for the earlier bid from a KKR-Stonepeak-led consortium and urged investors to take no action on that offer.
PHP is funding the cash portion of the offer through a £1.225pm facility arranged by Citibank, Lloyds and RBS.
A revised offer document will be sent to Assura shareholders in the coming days. Those who have already accepted the original offer will be deemed to have accepted the revised terms.
The deadline for shareholders to accept the offer is 1 pm (London time) on August 12.
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