KKR snubbed as Assura shareholders vote through PHP bid
Investors in NHS landlord Assura have voted to accept a bid from its London-listed rival Primary Health Properties, bringing an end to a bitterly fought takeover battle between PHP and private equity behemoth KKR.
As many as 63 per cent of Assura’s shareholders voted to approve the £1.8bn cash and equity offer from PHP, accepting the recommendation they received from the firm’s board last week despite an aggressive rearguard action from the KKR-led consortium.
The group – spearheaded by KKR and buyout firm Stonepeak – had engaged in a flurry of lobbying to convince the board of the merits of its offer.
But those efforts were rebuffed after directors of the NHS landlord, which owns and operates 600 general practitioner and primary healthcare buildings across the UK, threw their support behind the bid from London-listed PHP in a rare endorsement of Britain’s public markets.
The vote signals the culmination of what has been one of the year’s most closely watched takeover battles, during which Assura’s board had originally supported the £1.7bn all-cash bid from KKR, before switching its support to PHP’s more substantial merger proposal.
KKR’s interest in Assura dates back to October last year, when it had originally approached the landlord about a takeover alongside the Universities Superannuation Scheme. Its revised offer with Stonepeak was eventually accepted in April. But after the cash approach became public, PHP made two offers, the second of which was accepted in a rare underdog dealmaking victory.
The deal will create an entity with just short of £6bn in assets, to become UK’s largest listed healthcare landlord, and seventh-largest real estate investment trust (REIT).
But it will first need to be sanctioned by the Competition and Markets Authority (CMA), which has already announced it will comb over any antitrust ramifications of the consolidation the deal will entail. The deal has been frozen by the competition watchdog until it has concluded its investigation.
PHP branded the CMA enforcement a “planned, conventional and necessary step of the CMA process” and said its offer was not conditional on getting the regulatory green light.
The deal is likely to act as a handbrake on a spate of other private equity interest in the UK’s REIT sector, which have been trading at historically large discounts relative to the value of their assets.
US dealmaking juggernaut Blackstone has been waging a similar battle for commercial landlord Warehouse Reit, which, as with the Assura saga, has seen it square up against another real estate investor, Tritax Big Box.