PHP primed to win battle for Assura
Primary Health Properties has outbid rival team KKR and Stonepeak with a shares and cash offer valuing the Altrincham-headquartered healthcare property business at £1.79bn.
With Assura’s board recommending to shareholders they accept this offer, a deal would bring to a close a sale process that has gone on for most of this year.
In mid-May, rival healthcare REIT PHP announced a firm intention to make a cash and share offer for the entire issued and to be issued share capital of Assura. Private equity giant KKR and partner Stonepeak countered with its “best and final offer” earlier this month, a cash offer of close to £1.7bn.
A statement issued to the London Stock Exchange this morning declared that “the boards of PHP and Assura are pleased to announce the terms of a recommended combination of PHP and Assura which will be implemented by way of an increased shares and cash offer, pursuant to which PHP will acquire the entire issued, and to be issued, ordinary share capital of Assura”.
Under the terms of the increased PHP offer, Assura shareholders would receive, for each Assura share, 0.3865 new PHP shares and 12.5 pence in cash.
In addition, Assura shareholders would be entitled to receive a special dividend of 0.84 pence per Assura share.
Based on the PHP closing share price of 103.5 pence on 20 June, this would imply a total value to be received by Assura shareholders of 53.3 pence for each Assura share. The offer reflects a 5.8% premium compared to the KKR final offer.
Assura shareholders would also be entitled to pick up a number of other dividends, including this November’s expected PHP dividend.
The increased PHP offer, together with the special dividend and the Assura dividends, implies a total value of 55 pence for each Assura share and values Assura’s entire issued and to be issued ordinary share capital at approximately £1.79bn
Assura’s closing share price on 13 February, the last day before the offer period was opened, was 37.4 pence. The PHP offer, factoring in all dividends, reflects a 47.1% premium on that.
Subject to full acceptance of the increased PHP offer, following completion of the combination deal, Assura shareholders would hold approximately 48%. of the combined group’s issued share capital.
Harry Hyman, non-executive chair of PHP, said: “The PHP board continues to believe in the strong strategic rationale of the combination, which will create a leading healthcare-focussed 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.
“The PHP board welcomes the recommendation of the Assura board and, as a significant individual shareholder in PHP, I look forward to the significant value creation potential in the future from the combined group.”
Ed Smith, non-executive chair of Assura, said: “Following recent engagement between PHP and Assura, PHP has today further increased the terms of its offer, and has also addressed some of the potential risks that Assura had previously raised.
“The Assura board has always been and will remain resolutely focused on carrying out its fiduciary duties in the interest of Assura shareholders and in this context has decided to recommend this increased offer from PHP.”
The cash consideration payable by PHP will be funded by an unsecured loan to be made available through a facilities agreement with Citibank, RBS, Lloyds Bank, with a total aggregate commitment of £1.225bn.
Completion of the deal remains subject to foreign direct investment approval in the Republic of Ireland, which is expected to be signed off in two to three weeks.
Lazard, Barclays and Stifel represent Assura as financial advisers.
Headquartered in London, PHP now owns and operates more than 500 UK primary health sites. Key investors include BlackRock, which built up its stake last month.
