Stock Climbs 2% on Recommendation of Cash Acquisition
Shares in Assura (LON:AGR) advanced more than 2% Wednesday after the healthcare property group agreed to recommend a final £1.7 billion cash offer from Sana Bidco, a consortium backed by private equity firms KKR and Stonepeak. The company rejected a competing bid from Primary Health Properties plc (PHP) due to concerns about its financial structure and execution risks.
Transaction Details and Premium Analysis
Under the recommended terms:
Assura shareholders will receive 60 pence per share in cash
They will retain previously announced interim dividends of 0.84 pence per share for April and July
The total consideration represents a 39.2% premium to the 37.4 pence closing price on February 14 (the last trading day before the offer period began)
Additional premium benchmarks:
2% above the three-month volume-weighted average price through February 13
7% above the six-month volume-weighted average price
19% premium to Assura’s EPRA tangible net asset value of 50.4 pence per share as of March 31
The board described the offer as “best and final,” indicating the financial terms won’t be increased unless exceptional circumstances are permitted by the Takeover Panel.
Strategic Rationale Behind Rejection of PHP Bid
Assura’s board conducted a comprehensive review of both proposals before concluding that Sana Bidco’s offer provides greater certainty. Key reasons for rejecting PHP’s May 16 offer included:
Financial Risks:
Increased leverage and approximately £2 billion in refinancing obligations
Concerns about PHP’s ability to execute its financing plans
Asset Sale Concerns:
PHP’s intention to sell assets (including Assura’s UK primary healthcare properties) to reduce debt
Potential dilution of Assura’s core portfolio strategy
Strategic Fit:
Reduced exposure to long-term, inflation-linked leases – a strategy that has historically driven Assura’s growth
PHP’s focus on outpatient medical real estate with shorter lease structures
Execution Risks:
Integration challenges and £15 million annual cost synergies target
PHP’s refinancing needs and potential financial uncertainties
Regulatory Progress and Timeline
Sana Bidco’s offer has already secured regulatory approvals from:
China’s State Administration for Market Regulation
Israel’s Competition Authority
South Korea’s Fair Trade Commission
The consortium expects to obtain all necessary approvals by late June. The transaction is structured as a scheme of arrangement, with offer documents scheduled for dispatch to shareholders by June 25, outlining the terms and procedures for acceptance.
The board unanimously recommends shareholders accept the bid, with all directors (holding collectively 0.1% of shares) confirming their intention to vote in favor. This recommendation provides strong support for the transaction’s completion while addressing shareholder concerns about maximizing value in the current market environment.
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