Spire Healthcare Group rejected a takeover proposal from its biggest shareholder Mediclinic International, saying an offer that values the UK private hospital operator at 1.2 billion pounds ($1.6 billion) “significantly undervalues Spire and its prospects.”
South Africa’s Mediclinic, which owns almost a third of Spire, approached the company with an offer that valued its shares at 298.6 pence apiece in cash and stock, Spire said in a statement on Monday.
That represented a 29 percent premium to Spire’s closing price on Oct. 17, the day prior to the offer being made. Spire jumped by the most in a year in London trading, while Mediclinic said it was considering its next move following the rejection.
The takeover of Spire could be the swan song for Mediclinic’s CEO Danie Meintjes, who has transformed the Stellenbosch-based company through a series of acquisitions in Africa, the Middle East and Europe during his tenure.
Meintjes, who plans to step down in July, began investing in Spire in 2015 to tap growing demand for private health services as the UK’s state-run National Health Service comes under increasing budgetary constraints.
Shares of Spire jumped 11 percent, the most since September 2016, to 290 pence as of 8:15 a.m. in London trading. The proposal last week comprised 150 pence in cash and 0.232 new Mediclinic shares per Spire share.
“Shareholders are strongly advised to take no action in relation to the proposal,” London-based private health-care operator Spire said. “There can be no certainty that an offer will be made, or as to the terms on which any offer might be made.”
Following the UK’s split from the European Union in 2019, reduced labour mobility and a drop in the national income used to fund public services is likely to bring additional pressures on the nation’s underfunded, overcrowded health-care system. That may provide an opportunity for companies like Johannesburg-listed Netcare and Mediclinic to pick up the slack in offering critical services to the aging British population.
“Spire would provide a sizeable UK market presence where MDC already has working knowledge with likely no anti-trust issues,” James Vane-Tempest, an analyst at Jefferies International Ltd, wrote in a note to clients.
Mediclinic is required under UK law to announce by November 20 whether it plans to make a firm offer, the South African company said in a separate statement confirming the approach. The takeover offer is its fourth proposed transaction this year, according to Bloomberg data.
The company is still digesting the UAE-focused Al Noor Hospitals assets it acquired, and its investors may not have the appetite for another large transaction, Vane-Tempest said. Shares of Mediclinic dropped 0.4 percent to 638 pence in London.
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