Assura bidding war reignited as PHP improves offer

Primary Health Properties has made a third bid for the Altrincham-based healthcare investor, a deal that would value the business at £1.68bn.

Two previous indicative offers from rival PHP had been declined, with the Assura board announcing in early April that it had agreed terms with a joint venture made up of Stonepeak and private equity giant KKR.

That deal was priced at around £1.61bn and priced the entire issued share capital of Assura at 49.4 pence per share.

The offer from PHP, which already operates in the sector and would see the two businesses combined, is more convoluted. Under the terms of the offer, Assura shareholders would receive, for each Assura share, 0.3769 new PHP shares and 12.5 pence in cash.

PHP’s renewed offer represents a premium of 38.2% to Assura’s closing share price of 37.4 pence on 13 February, the last business day prior to the offer period kicking off, and is 11.9% higher than the second PHP bid, which was knocked back at the start of April.

Assura issued a brief notice on Friday, stating that its board is currently reviewing the PHP offer with advisers, and will make a further announcement in due course.

Subject to full acceptance of the offer, following completion Assura shareholders would hold around 48% of the combined group’s issued share capital.

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This would make the business the ninth largest UK-listed REIT by market capitalisation, with a £6bn portfolio, a specialist business with improved access to debt and equity, said PHP.

Assura shareholders would retain the declared quarterly dividend of 0.84 pence per share paid on 9 April, along with retaining the quarterly dividend of up to 0.84 pence per Assura share expected to be paid on 9 July.

These dividends combined represent up to a maximum amount of 1.68 pence per Assura share.

Harry Hyman, non-executive chair of PHP, said: “The PHP board believes the strategic rationale and financial terms of the proposed combination of the UK’s two largest healthcare focused listed REITs are compelling, with the potential to create significant long-term value for both PHP shareholders and Assura shareholders, and in excess of the cash offer price from the consortium.”

Chief executive Mark Davies added: “This is an important moment for primary care real estate. Property valuations are improving and rental growth prospects are strongly underpinned by high demand for space at a time the government is committed to a shift from secondary to primary care and the 10-year plan, to be published this summer, is something to be excited about as an investor in PHP.”

Like Assura, PHP is a developer and investor in the medical sector. The majority of its healthcare facilities are GP surgeries, with other properties let to NHS organisations, pharmacies, dentists, and the Health Service Executive in Ireland.

Assura, for its part, has been in a period of refocusing its holdings, paying £500m for a portfolio of private hospitals in August last year.

Davies said the deal would allow the combined business to trim £9m from its annual costs. He said: “The benefits of a combination of PHP and Assura are compelling and set out above. We have carefully crafted our offer which is expected to deliver earnings accretion to both sets of shareholders, underpinning our progressive dividend policy in the future, which remains crucially important.

“We encourage shareholders to support the combination and look forward to capturing the significant opportunity to create shareholder value in the future from the combined entity.”