KKR advocates for Assura to abandon PHP agreement during competitive bidding phase
In a significant development in the UK healthcare real estate sector, Primary Health Properties (PHP) has successfully secured a majority stake in Assura, following the acceptance of its £1.79 billion takeover offer by shareholders representing 62.93% of Assura's share capital. The offer is now unconditional, marking the end of a protracted bidding war against private equity giant KKR [1][3][4].
The bidding war saw key developments and conditions unfold. PHP initially raised its offer, which was recommended by Assura's directors on June 23, and the Assura board rejected KKR's competing bid on July 15 [3]. PHP's acceptance condition of obtaining at least 50% of voting rights was surpassed, and all remaining conditions for the offer have been met [3]. KKR confirmed that its own bid had lapsed following PHP's success in securing a majority stake [1].
PHP intends to request the delisting of Assura from the London Stock Exchange and the Johannesburg Stock Exchange once it holds 75% or more of the voting rights [3]. A special dividend of 0.84 pence per Assura share, part of the revised PHP deal, is set to be paid now that the offer is unconditional [3].
The outcome of this bidding war signals a significant public-to-public consolidation in UK healthcare real estate, with PHP emerging as the preferred acquirer over private equity buyout attempts by KKR [1][2]. The deal is expected to create a larger, more liquid company with scale benefits and a strong management team [1].
However, PHP's shares tumbled below 96p at the end of July, prompting Bidco to engage in discussions with Assura's board, lobbying for KKR's deal [6]. Oli Creasey, head of property research at Quilter Cheviot, warned the saga is nearing its conclusion but isn't done yet [7].
Analysts have warned of a final twist left in the bidding war between Bidco and PHP [8]. Further twists and turns could be on the cards, according to Creasey [9]. Bidco argued that many investors involved in the arbitrage activity are not protected against risk and likely to sell PHP shares once received [10].
Meanwhile, the Competition and Markets Authority (CMA) is investigating a proposed merger between Assura and PHP due to the deal being between two major owners and operators of primary care and community health facilities in the UK [11]. If PHP secures enough acceptances by the deadline of 12 August, the takeover offer can be declared unconditional, according to UK takeover code [5].
The CMA investigation aims to ensure that the merger does not give the combined company too much market power and decrease competition [11]. PHP pledged to lower Assura's acceptance condition of the offer and to accelerate its quarterly dividend in October [12].
In June, PHP returned with a sweetened offer for Assura at 51.7p per share [13]. The "Best and Final Increased Cash Offer" from Bidco is priced at 50.42p per share [2]. The saga between PHP and Bidco continues, with the final outcome yet to be determined.
References: 1. The Guardian 2. Sky News 3. Reuters 4. City A.M. 5. The Telegraph 6. Financial Times 7. Property Week 8. Property Investor Today 9. Property Funds World 10. Citywire 11. The CMA 12. The Independent 13. Property Week
- The successful acquisition of Assura by Primary Health Properties (PHP) in the UK healthcare real estate sector demonstrates a significant shift, as PHP secured a majority stake in the business, leaving behind competition from private equity giant KKR.
- As a result, the enlarged PHP company is anticipated to bring about scale benefits, increased liquidity, and a strong management team, providing opportunities for further investment in the property markets.
- The outcome of this bidding war between PHP and Bidco is still in question, with analysts warning of potential twists and turns, as the Competition and Markets Authority (CMA) takes a closer look at the proposed merger and its potential impact on market competition.
