MARKET REPORT: Top shareholders avoid £ 1.4bn offer on Spire Healthcare, claiming it grossly undervalues the company
Spire Healthcare collapsed after shareholders launched a £ 1.4 billion takeover bid that would have made it the UK’s largest private hospital group.
Spire’s Australian rival Ramsay Health Care had submitted an offer of 250 pence per share for the medium-sized hospital group, which was accepted by the board of directors.
It had to win 75 percent of the vote in a one-time meeting for the deal to go through. But it only reached 70 percent after two of Spire’s largest shareholders – Fidelity and Toscafund – rebelled against Ramsay and tried to convince others to do the same.
Acquisition target: Spire’s Australian rival Ramsay Health Care’s offer for the hospital group was accepted by the board, but shareholders – Fidelity and Toscafund – have declined
Ramsay had been trying to woo Spire’s investors since May when it made a 240p offer, which was also backed by management.
It was raised to 250p earlier this month – but Fidelity and Toscafund continued to say that it severely undervalued the company they believe will outperform over the next several years.
It is unusual for a takeover agreement accepted by a company’s board of directors to be torpedoed by shareholders. Spire has 39 hospitals and eight clinics in the UK serving private and NHS patients.
The company is led by Sir Ian Cheshire, Chairman of Barclays UK, who said the board respected the decision and that the company “is well positioned to succeed as a stand-alone company”.
Stock Watch – United Oil and Gas
United Oil and Gas started the week on a bang after it was announced that it had struck oil elsewhere in Egypt’s western desert.
The company owns 22 percent of an area called Abu Sennan where other wells have been successful.
Chief Executive Brian Larkin said the test drilling results were much better than expected.
He added that United Oil and Gas is likely to keep looking for more oil in the license area.
Shares in the main listed group rose 4 percent, or 0.15 pence, to 3.85 pence yesterday.
Cheshire added, “During our ongoing engagement with shareholders, the feedback on the long-term strategy and our strong management team has been overwhelmingly positive.”
Alex Wright, portfolio manager at Fidelity Special Solutions Fund, said Spire is in a good position to do well after Covid passed away.
“We remain confident and support Spire’s strategic plans,” he said. “In our opinion, Spire can return to 2015-2017 earnings levels over the next three to five years.” Despite Ramsay’s best efforts, many believed the acquisition was in trouble when Spire shares closed at 235p on Friday – well below the offer price.
The stock fell another 7.2 percent, or 17 pence, to 218 pence last night.
The broader market was also in the red for stocks around the world after a hot day as concerns about the spread of the Delta variant continued to grow.
In Great Britain, the FTSE 100 fell by 2.3 percent or 163.7 points to 6844.39 and the FTSE 250 also by 2.3 percent or 526.12 points to 21,940.88, as England’s “Freedom Day” was characterized by rising infection rates and mixed news of tarnished the government urging people to remain cautious while also lifting Covid restrictions.
In addition to airlines and travel stocks, oil stocks also lost ground after Opec reached an agreement to increase its offering from August.
The price of oil fell and BP was down 4.7 percent, or 13.8 pence, to 278.45 pence, while Shell was down 4.2 percent, or 57.4 pence, to 1311 pence.
Another notable loser was Ocado after the online delivery company suffered its second fire in just two years. The fire was caused by a robotic collision at his warehouse in Erith, southeast London.
One broker said: “The concerns are not about Ocado itself, but about what if a fire breaks out in a customer warehouse like Kroger. It will raise some eyebrows at how this will affect future business. ‘
Shares fell 1.9 percent, or 34 pence, to 1,771 pence.
Further down the market, Litigation Capital Management announced that, following strong investor interest, its second fund will be closing by the end of the summer.
The £ 219 million fund is a huge vote of confidence in the company that competes with Burford Capital (down 4 percent, or 30p, to 722.5p).
Litigation finance has grown rapidly as an asset class in recent years as investors seek higher returns on their money.
But stocks fell 5.2 percent, or 6 pence, to 109 pence.
Makeup group Revolution Beauty made a disappointing debut on AIM. The Camden-based company went public at 160 p.m. but closed at 150 p.m.