IK Investment Partners to buy Medica in £269m deal, shares surge

Telemedicine services provider Medica Group surged on Monday after agreeing to be bought by private equity firm IK Investment Partners in a £269m deal.

Under the terms of the acquisition, IK will pay 212p per share in cash. This represents a premium of around 32.5% to the closing share price on Friday.

Medica chairman Roy Davis said: "The board of Medica believes that the offer from Bidco represents an attractive and certain value in cash today for Medica shareholders which reflects our reputation as a leading, high-quality teleradiology and wider telemedicine provider with a compelling service offering.

"The board of Medica believes that IK Partners is a strong and credible partner for the business and is well positioned to support its next phase of development, including accelerating investment in the company which will benefit our customers and their patients going forward."

Broker Peel Hunt, which rates Medica shares at ‘reduce’, said: "Whilst we appreciate that some investors may want to see a premium greater than 32%, Medica’s share price has been rangebound for some time (significantly longer than the style rotation), and we believe this is a good price for a business that, in our view, requires investment in technology in order to maintain its market-leading position.

"As a reminder, we are not bearish on the business per se, but wanted to see different capital allocation. Additionally, we were concerned that paying dividends was not in the business’ long-term best interests and that current markets did not want to see lots of leverage to support investment/M&A."

At 0915 BST, the shares were up 34% at €2.38.