The bidding war between private equity giant KKR and retail investor Primary Health Properties (PHP) has heated up after KKR pushed for Assura to ditch an already recommended takeover offer from the latter.
KKR’s investment vehicle Bidco – which is also by fellow US private equity Stonepeak – said on Friday it has held discussions with Assura’s board to lobby for its deal.
Bidco blasted PHP’s “misleading” claim that the drop in its share price was due to temporary merger arbitrage activity – where some investors were shorting PHP while buying Assura shares.
The investment firm argued many of these investors were not protected against risk and likely to sell PHP shares once they receive them, adding further pressure onto the firm’s share price.
PHP was also facing pressure on Friday as it released a statement urging Assura shareholders to accept its offer. The firm said only a small percentage of shareholders had so far and cautioned they needed to meet a deadline of 12 August.
The deadline coincides with UK takeover code where an offer can only be declared unconditional – where PHP has secured enough acceptances to complete the deal – after a ‘minimum offer period’ which ends around Day 55 of a proposal.
CMA eyes Assura and PHP merger
Bidco added the Competition and Markets Authority (CMA) was investigating a proposed merger between Assura and PHP due to the the deal being between two major owners and operators of primary care and community health facilities in the UK.
The CMA investigates potential deals which could give a merged company too much market power and decrease competition.
Bidco argued the CMA would not investigate its proposed takeover.
The firm’s “Best and Final Increased Cash Offer” is priced at 50.42p per share, which Bidco said is higher than PHP’s after recent share price declines.
PHP returned with a sweetened offer for Assura in June at 51.7p per share and pledged to lower Assura’s acceptance condition of the offer and to accelerate its quarterly dividend in October.
Assura said in June it had recommended its board to accept a fresh cash offer from PHP, which valued the firm at £1.79bn.
But analysts warned after Assura accepted the offer there was one final twist left in the bidding war.
“The saga is nearing its conclusion, but isn’t done just yet,” Oli Creasey, head of property research at Quilter Cheviot, warned.
“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 shares tumbled below 96p at the end of July.
