Healthcare property business Assura plc says it is “minded to recommend” a new offer from a consortium led by Kohlberg Kravis Roberts (KKR) which values the Altrincham-headquartered company at £1.6 billion.
The 49.4p share cash offer is a 2.9% increase on KKR’s previous proposal of 48p, and both pledged to retain dividend payments and represents a 30.6% premium to the average Assura share price of 37.8p over the 3 months to 13 February 2025.
The consortium of KKR and Stonepeak, both long-term infrastructure investors, has said it will deploy further capital to the portfolio to continue its growth.
In a statement to the stock market this morning (10 March 2025) Assura’s board said they “would be minded to recommend such an offer to Assura shareholders,” and has “decided to engage in discussions”.
A rival offer to merge with Primary Health Properties PLC – also a healthcare real estate investment trust (REIT) which would have valued Assura shares at 43p has been rejected.
The board statement said the cash offer from KKR is “more attractive than the PHP Proposal as it provides shareholders with the opportunity to receive cash consideration at a significantly higher value per share than the proposal from PHP and with materially less risk.”
PHP now has until 5pm on 7 April 2025 to make an offer for Assura.
An an early analyst note from Panmure Liberum said: “the updated bid doesn’t materially change our view that these levels are still insufficient to compensate equity holders for giving up a company with these long-term growth prospects.”
Russ Mould, investment director at Manchester-based investment platform, AJ Bell, said: “Once again, we have bid situations where the suitor has had to dig deeper into their pockets to try and win over the target’s shareholders. Increased bids have become a regular occurrence over the past few years as bidders first try their luck with a cheeky offer and then play fair with a higher price a few days, weeks or months later.
“Doctors’ surgeries property owner Assura has found itself the subject of a bidding war. Private equity group KKR had already submitted four separate proposals to buy the group, including a 48p per share deal on 13 February. That’s now been bumped even higher to 48.56p and the right to keep a planned dividend in April, implying that KKR is prepared to do whatever it takes to secure the deal.
“A second party throwing their hat into the ring makes things interesting. Primary Health Properties has also proposed a merger with Assura, but the target has rejected the proposal on the grounds that KKR’s cash offer is more attractive than an all-share deal. KKR’s bid is also higher than the implied 43p per share PHP merger value as of 13 February.
“The fact Assura’s share price at 46.48p is trading below KKR’s latest proposal implies the market doesn’t believe Primary Health Properties is going to come back with a significantly better offer.
“It also suggests scepticism that the new KKR proposal is a done deal. The 31.9% bid premium is significantly below the 47% average for UK takeovers in 2024, meaning Assura’s shareholders might feel they aren’t being compensated adequately. After all, they would be giving up an investment that could generate much greater returns over time.”