Australia's Ramsay Health Care to buy Spire for just under £1bn

Australia’s Ramsay Health Care said on Wednesday that it has agreed to buy London-listed Spire Healthcare for just under £1bn.

Under the terms of the transaction, Spire shareholders will receive 240p per share in cash, which is a 24.4% premium to Spire’s closing share price on Tuesday.

Ramsay said the deal will be "transformational" for its UK business, that it has a "compelling” strategic and financial rationale and delivers significant benefits for both sets of shareholders.

Spire’s directors plan to recommend unanimously that shareholders vote in favour of the deal. The company’s chief executive, Justin Ash, said: "Spire has made significant progress towards the strategic goals laid out in 2018, including a material improvement in CQC ratings, strong growth in private payor income, and, more recently, has showcased its strengths and capabilities through its partnership with the NHS during the Covid-19 pandemic.

"The highly complementary combination of Spire and Ramsay presents a unique opportunity to accelerate this progress, will increase choice to private and NHS patients across the UK and will offer a platform where our colleagues, consultant partners, businesses, and broader stakeholder group, including the NHS, can continue to deliver a positive difference to patients."

At 0820 BST, Spire shares were up 27% at 244.50p.

Broker Peel Hunt said: "In 2017 Spire rejected a bid from Mediclinic that valued the group at £1.2bn or 298.6p per share, which represented a 30% premium at the time. Whilst this offer is at a lower absolute price and represents a lower premium, and may therefore meet with some resistance from other shareholders, the spate of recent similar transactions is indicative to us that public markets have been fundamentally mispricing UK healthcare assets.

"In this context, these recent deals may have a higher chance of completion against the current backdrop than was previously the case."