Spire issued a statement yesterday, saying that it had reviewed the proposal and decided that it significantly undervalued the company and its prospects.
Mediclinic also confirmed that its bid was rejected and said “a further announcement will be made in due course, but there can be no certainty that an offer will be made.”
Mediclinic owns 29.9percent of Spire and was offering 150pence (R26.97) in cash and 0.232 new Mediclinic shares per share in a deal that valued Spire at roughly £1.2billion (R21.58bn).
The company bought a 29.9percent stake in 2015 in Spire for £430million from private equity firm Cinven.
The group said the proposal valued Spire shares at 300p each, representing a premium of 30percent to the closing price of Spire shares last Tuesday and 31percent to the volume weighted average closing price in the one month prior.
Byron Lotter, a portfolio manager at Vestact, said rumours started circling that Mediclinic was looking to make a bid for the rest of the business on Friday afternoon.
He said: “Spire provides care services via 39 hospitals and 10 clinics in the UK. Much of that is focused on cancer, sports medicine, physiotherapy and rehabilitation. They have a 17percent market share of the UK private acute hospital market and 24.4percent in private hip and knee replacements.”
Lotter said Mediclinic made the offer even though Spire was also sitting on around £436m in debt. “The company made 8.7p for the half year to end June and if you annualise that, the price Mediclinic is offering is around 17 times earnings.”
Mediclinic said in its trading update for the six months to end September last week that the investment in Spire contributed £8.9m to its profit. It was still trying to turn around one of its acquisitions, Al Noor, the United Arab Emirates-based hospital group, which it bought last year for $2.2bn (R30bn). Spire shares traded 13.1percent higher yesterday morning at 295.6p a share.
Lotter said it is still possible for Mediclinic to acquire the rest of Spire in the future. “The Spire board have rejected the offer, but Mediclinic have until November 20 to revise it or officially say they won’t make another bid,” he said.”
Mediclinic shares fell 2.38percent on the JSE yesterday to close at R113.01.
- BUSINESS REPORT