US investment consortium wins £1.7bn battle for NHS landlord
Healthcare property firm Assura Group is set to be acquired by a consortium of US private equity firms after they trumped a rival bid.
The increased 'best and last' cash offer of £1.7billion from private equity groups KKR and Stonepeak will be recommended to shareholders as Assura's top brass rejected a rival proposal from Primary Health Properties.
The rival proposal PHP valued Assura at approximately £1.68billion.
Assura is the latest in a growing list of British businesses being bought out and taken private by overseas private equity firms or investment companies, attracted by cheap valuations.
Assura said that private ownership would enable it to secure new funding and invest in healthcare infrastructure, without the pressure of public market expectations.
Both Assura and PHP own doctors' surgeries, hospitals and hospices across the UK, and are major landlords to the NHS.
KKR, one of the biggest private equity outfits in the US, teamed up with New York investment firm Stonepeak to get the deal over the line.
Via their Sana 'bidco' vehicle, KKR and Stonepeak hiked their final offer to 52.1p per share in cash, including two 0.84p dividends. This represented a 39.2 per cent premium to the pre-offer price.
After weeks of due diligence into the PHP offer, directors of the healthcare property developer concluded that the bid presented 'material risks and downsides to Assura shareholders', including over-leverage and uncertainty around planned asset disposals.
The revised offer from Sana will now proceed via a takeover offer, increasing deal certainty, with antitrust clearances already secured in China, Israel and South Korea, Assura said on Wednesday.
Assura chair Ed Smith, said: '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.'
'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.'
Andrew Furze, managing director at KKR, said: 'After nearly a year of engagement, this is our best and final offer which we believe is lower risk than other alternatives and higher in value offering a significant premium.
'We require no disposals to achieve our ambition and importantly the all cash offer poses minimal execution risk.'
Blackrock is the biggest holder of Assura shares, with 9.9 per cent of the equity. L&G, Aberdeen and Quilter are all among the top ten shareholders.
Last summer, Assura announced the £500million acquisition of a portfolio of 14 private hospitals from a Canadian REIT. The hospitals are spread throughout Britain, though with a concentration towards London, and were let on long leases to a number of private healthcare providers.
Assura shares rose 2.04 per cent or 1.00p to 49.90p on Wednesday, having risen around 27 per cent in the last year.
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