A number of Spire shareholders could be set to reject Ramsay Health Care’s £1bn takeover bid after institutional investor Fidelity International said the 240p per share offer materially undervalued the business, according to reports in Sky News.
Speaking to the news outlet, Fidelity Special Situations Fund manager Alex Wright said the investor would not be ‘accepting the bid at this level’ and that Spire was well placed in the UK’s post Covid recovery, ‘which should feed into future earnings growth’.
The Board of both private hospital groups unanimously recommended Ramsay’s offer last month. Spire’s shareholding directors and major shareholder Mediclinic have agreed to accept the offer, which represents a premium of around 24% on Spire’s closing price on 25 May and 55.8% on 5 March – the last business day before Ramsay’s initial approach.
Ramsay Health Care UK CEO Dr Andy Jones told HM the deal would be transformational for both companies and for patients, who would benefit from investment in new platforms and pathways across the payor mix.
Although divestments will undoubtedly result from the merger, Ramsay expects it to deliver £26m in synergy savings from year three onwards and drive volume growth.
However, Wright told Sky News that 39-strong hospital group Spire could return to 2015-17 level of earnings over the next three to five years. To put that in perspective, he said, the board turned down a 300p per share approach in 2017 when stock had recently traded at 350p.
According to the report, other shareholders have also expressed concern at the offer, suggesting Spire’s freehold property portfolio is worth £1bn alone.
It said they want to push Ramsay’s offer closer to 400p per share.