Shares of Spire Healthcare Group PLC (LON: (SPI) gapped 29% higher after Australian healthcare provider Ramsay Health Care offered to acquire the firm for £1 billion ($1.4 billion).
Ramsay Health offered to acquire Spire’s outstanding shares at 240p each, a 24.4% premium to Tuesday’s closing price.
Ramsay said that it is talking with the UK Competition and Markets Authority to approve the deal. However, the company noted that it might have to divest some of its clinics and hospitals before the competition authority can approve the takeover.
As evidenced by today’s gap up, investors cheered the move, but the deal is far from done.
Ramsay’s bid is supported by Mediclinic, which owns a 29.9% stake in Spire Healthcare, acquired in 2015 for £432 million, with the current deal valuing the stake at £287.8 million.
Mediclinic supports the bid to cash out its losing position and use the funds to reduce leverage, ensure financial flexibility and pursue further growth opportunities.
Given Mediclinic’s support, Ramsay Health Care will not be hard to get the shareholder votes needed to approve its offer.
Ramsay also clarified that the deal would deliver high single-digit earnings per share from 2024 once the process of integrating Spire’s assets is completed.
Spire is currently in a healthy financial position, given that it recently announced that it expects its 2021 revenues to return to 2019 levels despite the costs and uncertainties associated with the coronavirus pandemic.
Spire Healthcare share price.
Spire Healthcare shares gapped 29% higher to trade at 249p, rising from Tuesday’s closing price of 193p.
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