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Assura has attracted a rival £1.5bn takeover bid from listed peer Primary Health Properties, kicking off a tussle for the NHS landlord following a higher proposal from private investors including KKR last month.
Assura owns hundreds of UK doctors’ surgeries and healthcare centres, valued at £3.2bn. The board of the FTSE 250 landlord in March said it was “minded to recommend” a £1.6bn all-cash offer from KKR and infrastructure investor Stonepeak Partners.
The board said it favoured that cash offer totalling 49.4p per share as being “more attractive” than an earlier all-share bid from PHP, a rival company in healthcare real estate, which it rebuffed.
PHP on Thursday said it had upped its offer to include about 20 per cent cash, at 9.08p per share. It said its overall proposal now amounted to 46.2 pence for each Assura share — valuing the company at £1.5bn.
Despite the lower financial terms, PHP said its bid would “deliver significant strategic and financial benefits” including greater scale for the combined group and the ability for shareholders to benefit from future growth and income as the real estate sector recovers.
Private equity groups have launched a series of takeover bids for smaller UK-listed real estate vehicles in recent months, as they seek to capitalise on what many investors believe will be the bottom of the property market.
Landlords have been hit by the sharp rise in interest rates, which has knocked the value of their portfolios. Many are trading at a large discount to the value of their assets.
KKR has also been selected as the preferred bidder for a majority stake in the UK’s largest water utility, Thames Water.
Alexander Totomanov, an analyst at Green Street, said a deal with PHP could run afoul of the UK’s competition watchdog given the “concentration of GP real estate ownership that would result”.
