One twist left in the PHP and KKR bidding war for Assura
The Assura bidding war between KKR and PHP looked to be sealing its final chapter on Monday – but analysts warn there could be one more twist in the saga.
Assura said on Monday it had recommended its board to accept a fresh cash offer from PHP, which valued the firm at £1.79bn.
The deal tabled by the NHS landlord represents a 47 per cent premium to Assura’s share price in mid-February – the day before the offer period began.
This trumped private equity giant KKR’s “best and final offer” of nearly £1.7bn earlier this month.
But Oli Creasey, head of property research at Quilter Cheviot, warned: “The saga is nearing its conclusion, but isn’t done just yet.”
PHP shares tumbled as much as four per cent on Monday, falling to around 99p.
The agreement between PHP and Assura is a mixed cash-and-share bid, meaning that the value of the offer is contingent on PHP’s share price.
The fall in stock reduces the total per-share value of the bid and in turn reduces the 5.8 per cent premium it holds over KKR’s offer.
“We don’t think KKR will increase their offer, but they may not have to – another bad morning and PHP’s shares would go past the crossover price of 96p.
“Given events to date, further twists and turns could be on the cards,” Creasey said.
PHP and Assura deal causes waves
KKR – also known as Kohlberg Kravis Roberts & Co. – lashed out at its bidding rival last month, warning Assura that a takeover by PHP would come with “numerous critical issues”.
The US private equity giant said its offer was “superior” and a deal with PHP could “significantly increase the financial risk profile of the combined entity”.
The New York firm argued the combination of the two largest providers in the UK healthcare real estate sector could attract scrutiny from the Competition and Markets Authority (CMA) which oversees M&As to ensure they do not reduce competition in a way that harms UK businesses and consumers.
Should shares fall in line for the PHP and Assura deal, the firms may face yet another hurdle in the CMA.
“Adding Assura’s ready-made portfolio of 600 buildings, including doctors’ surgeries, is an attractive proposition,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.
“This is putting the balance sheet under more pressure, but PHP still looks set to benefit from several tailwinds which help underpin its long-term dividend-paying potential.”
KKR on the hunt
While one British stock might be – just – escaping the clutches of a KKR takeover, the private equity firm may be making a swoop for another.
Industrial group Spectris announced it had agreed to a £3.8bn takeover by US private equity Advent but KKR teased a bidding war in the hour following.
The firm confirmed it was in the “advance stages of due diligence” and arranging financing for a potential bid after the takeover was announced.
It said it had been “engaging constructively” with the Spectris board, since making its first approach on June 2 and “strongly encourages shareholders to take no action with regards to the Advent offer”.
This may line the firm up for another bidding war, this time with a fellow US private equity, but leaving an outcome of a foreign takeover almost confirmed.
The embattled London market has faced a fleet of delisting woes this month, as overseas acquisitions plagued the exchange.
Whilst Assura will be set for a delisting under its deal with PHP, City officials may be hoping the deal can shake any further twists – if only to avoid yet another foreign takeover snapping up British stock.