As health checks for the UK\u2019s shrinking stock market go, it\u2019s hard to beat the bid battle for Assura: the real estate investment trust (Reit) whose 603 buildings house GP surgeries and private hospitals. So, this is just what the doctor ordered: an overdue admission from the board, chaired by Ed Smith, that there\u2019s plenty of listed life in the patient yet. <\/p>\n
Having been leant on by a bunch of Assura investors, it\u2019s switched its recommendation to the \u00a31.79 billion cash-and-shares offer from Assura\u2019s main quoted rival, Primary Health Properties. And, yes, it took a tiny boost to the dose of about 2 per cent to convince Smith & co to do it. PHP is now offering 0.3865 new shares, up from 0.3769, for each of Assura\u2019s, plus an extra 0.84p special dividend to go with the same-again 12.5p-a-share cash: a figure totting up to 53.3p a share, at least before the merger arbs sent PHP shares down 4 per cent to 99.2p.<\/p>\n
Yet, while that cut the premium to the \u201cbest and final\u201d 50.42p cash bid from the infrastructure duo of KKR and Stonepeak to just 2.5 per cent, the choice for long-term investors has been clear for weeks. All KKR and Stonepeak are offering is a cash exit at Assura<\/a>\u2019s net asset value of 50.4p a share at a cyclical low in the property market: scant reward for 22 years building its portfolio. It never looked enough to cash out. <\/p>\n \u2022 NHS landlord Assura backs \u00a31.7bn merger with rival PHP<\/b><\/a><\/p>\n By contrast, PHP is offering a 48 per cent stake, plus a share in \u00a39 million of synergies, in a bigger quoted healthcare Reit: one whose prospects are now being enhanced by lower interest rates and a spending review bringing an extra \u00a329 billion a year for the NHS.<\/p>\n Shareholders with about 15 per cent, including Schroders, Quilter Cheviot, Columbia Threadneedle, Aberdeen, Allianz and Baillie Gifford, have said they\u2019ll back PHP\u2019s bid: a point they\u2019ve made clear to Smith and the senior independent director Jonathan Davies.<\/p>\n Indeed, the bigger puzzler is why the board sided for so long with KKR and Stonepeak. Yes, Assura shares were at a big discount to NAV, but the board still batted away four efforts from KKR, banging on about \u201cthe long-term prospects of the company\u201d \u2014 only to roll over in March at the fifth attempt for a pittance more. And, then, when PHP provided a long-term alternative at a higher price, the board trashed it, parroting stuff from KKR and its adviser Jefferies. <\/p>\n In fact, it\u2019s miraculous how 2 per cent extra can make all the board\u2019s concerns about \u201celevated leverage\u201d, \u201crefinancing obligations\u201d, \u201casset disposals\u201d and \u201cintegration risks\u201d simply go away. Still, it got there in the end, with Smith saying PHP had \u201caddressed some of the potential risks that Assura had previously raised\u201d. He\u2019d argue, too, that, by banking a final offer from the cash bidders at a 39 per cent premium, he squeezed a bit more out of PHP. <\/p>\n \u2022 Business live: the latest news on companies, markets and the economy<\/b><\/a><\/p>\n Whatever, with Assura shares standing at 49\u00bep, PHP\u2019s chairman Harry Hyman and the former Wolverhampton Wanderers professional footballer turned chief executive, Mark Davies, will know this game isn\u2019t yet won. Assura\u2019s recommendation is key to landing passive investors, holding about 20 per cent, who typically take their cue from the board. But merger arbs hold 15 per cent more, while KKR and Stonepeak have bought 5 per cent of the shares. And, while both bids are structured as offers needing only majority support, PHP\u2019s is vulnerable to market shocks, not least over Iran<\/a>. All the same, at least the right bidder is now in front. <\/p>\n Energy sapping<\/p>\n It was in his warm-up act as business secretary that the ex-chancellor Kwasi Kwarteng scrapped Britain\u2019s \u201cindustrial strategy\u201d. He declared it a \u201cpudding without a theme\u201d \u2014 unlike his famous mini-budget, of course, which turned out to be a pudding with an unexploded bomb inside it. Still, in 14 years in power, Kwarteng was not really an outlier. None of the Tories\u2019 ten business secretaries delivered anything resembling a joined-up industrial strategy. <\/p>\n Is Labour off to a better start? Well, there\u2019s always a danger in politicians trying to pick winners. And it\u2019s chosen eight sectors: defence, advanced manufacturing, clean energy, life sciences, technology, the creative industries and professional and financial services. Yet, at least, it\u2019s homed in on a key issue: if we don\u2019t cut our electricity costs<\/a> for energy-intensive businesses, which last year \u201cpaid twice the European average\u201d, we won\u2019t have any industry left. <\/p>\n \u2022 Keir Starmer unveils \u2018targeted, long-term\u2019 industrial strategy<\/b><\/a><\/p>\n Hence a plan to reduce electricity bills by up to 25 per cent by 2027 for 7,000-plus businesses, spanning the chemicals, aerospace and steel industries, while also speeding up their connections to the grid.<\/p>\n How will the government cut their costs by \u00a335 to \u00a340 per megawatt hour? Mainly by letting them off green levies and via more alignment with the EU carbon market, at a cost of about \u00a32 billion over four years. <\/p>\n Still, it does beg a key question. If we\u2019re letting some of the most polluting businesses off the green charges, what about everyone else? And how long before the government brings in those long-awaited reforms to the system that will stop electricity prices being set by the marginal price of gas? It\u2019s time there was a strategy for that. <\/p>\n KKR missing out <\/p>\n A triple whammy so far this month for KKR: pulling the plug on Thames Water<\/a>, behind in the battle for Assura, and now outranked by Advent in the \u00a33.8 billion bid for Spectris<\/a>: an agreed deal whose 84.6 per cent premium tells you all you need to know about UK market mispricing. <\/p>\n KKR says it\u2019s \u201cactively engaged\u201d in a potential counterbid for Spectris \u2014 and the shares closed at \u00a337.98, above the \u00a337.63 offer price. But fail to deliver and KKR could be looking at a quick UK hat-trick of lost deals. <\/p>\n alistair.osborne@thetimes.co.uk<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"As health checks for the UK\u2019s shrinking stock market go, it\u2019s hard to beat the bid battle for…\n","protected":false},"author":2,"featured_media":212072,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4316],"tags":[105,4348,16,15],"class_list":{"0":"post-212071","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-healthcare","8":"tag-health","9":"tag-healthcare","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114741825337032967","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/212071","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=212071"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/212071\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/212072"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=212071"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=212071"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=212071"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}