Assura, a leading UK healthcare real estate investment trust, on Tuesday accepted a sweetened, best and final cash offer from private equity-backed Sana Bidco, valuing the company at approximately £1.7 billion (R41bn).
Assura is listed on the London Stock Exchange with a secondry listing on the JSE.
The deal comes after a brief bidding war with Primary Health Properties (PHP), which has now been effectively sidelined.
Sana Bidco – a consortium formed by US private equity giant Kohlberg Kravis Roberts (KKR) and infrastructure investor Stonepeak – increased its cash offer to 50.42 pence per share, up from its original bid announced on April 9. Including declared dividends of 1.68 pence, the offer values Assura shares at 52.1 pence, representing a 39.2% premium over the pre-offer closing price on February 13.
It values the entire issued and to be issued ordinary share capital of Assura at approximately £1.7bn on a fully diluted basis.
In a statement, Assura said the revised terms are now unanimously recommended by its board, following a “careful and thorough” evaluation of the rival PHP bid, which was announced in May and offered a mix of shares and cash.
“The Board’s decision to recommend the offer from KKR and Stonepeak follows a careful and thorough evaluation of both offers, during which the Board has been firmly focused on its fiduciary duty to shareholders,” said Assura’s non-executive chair Ed Smith. “KKR and Stonepeak are highly experienced investors in healthcare and infrastructure and I am confident that with their support, and the additional capital they will provide, Assura will continue to deliver the high-quality healthcare infrastructure our communities need.”
Certainty Over Synergies
The board cited several concerns over PHP’s proposal, saying it “presents material risks and downsides to Assura shareholders, which undermine the potential benefits of the proposed combination under the PHP offer”.
Concerns including:
- Elevated leverage “significantly exceeding the target loan-to-value ratios of both Assura and PHP”,
- Execution risk: The Assura Board noted the intention of PHP to reduce leverage of the combined group through asset disposals, including that of Assura’s portfolio of UK private hospitals.
- Reduced exposure to long-dated, inflation-linked leases.
The PHP offer would have involved asset disposals, notably Assura’s private hospital portfolio, to manage debt – a move the Assura board viewed as high-risk and potentially value-destructive.
The Assura board said it believes that Bidco’s best and final increased cash offer provides the certainty of cash today to Assura shareholders, alongside long-term capital to fund significant investment in the UK’s healthcare infrastructure and support investments in the NHS estate.
The Bidco offer now moves forward via a traditional takeover offer under the Companies Act, replacing the previously proposed scheme of arrangement. The switch allows Bidco to move quicker and provides more deal certainty. To succeed, Bidco must secure over 50% of Assura’s share capital, a threshold it aims to surpass with acceptances and acquisitions.
With the board’s full support, a higher cash price, and diminishing prospects for the PHP proposal, the path appears clear for Bidco to take control of one of the UK’s most prominent healthcare landlords in the coming weeks.
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