The bidding battle for the NHS landlord Assura has heated up after its US suitor KKR lobbied the board to accept its offer, while the competition watchdog stepped up its investigation of Assura’s £1.79bn takeover by a rival UK healthcare investor.
Primary Health Properties (PHP), which invests in buildings housing GP practices, has been blocked from fully integrating Assura by the Competition and Markets Authority while it looks into the takeover.
The watchdog said it had served an initial enforcement order on the companies, after launching an investigation into the takeover last month to determine whether the deal would “result in a substantial lessening of competition”.
PHP won backing from Assura’s board in June for the acquisition, after a lengthy bidding war with the New York-based private equity firm KKR.
Assura, which was founded in Altrincham in Greater Manchester in 2003, has a market value of £1.6bn.
Last August it struck a £500m deal with a Canadian investor to buy 14 private hospitals across the UK, including Cancer Centre London and the Edgbaston hospital in Birmingham. Assura has been buying healthcare properties at a time when the NHS remains under immense pressure to reduce long waiting times for operations and other treatments.
It emerged on Friday that KKR has urged Assura’s board to back its takeover bid and withdraw its support for PHP’s offer. KKR, which is leading the bid with Stonepeak Partners, said it had met the board of Assura in recent days to lobby for its own cash takeover of the company.
KKR and PHP were locked in a takeover battle for Assura for months before Assura’s board backed PHP’s higher bid in June.
The US private equity firm argues that a number of factors have changed since Assura threw its support behind PHP’s offer, including a decline in the share price of both companies, which it said had raised the premium of its own cash offer.
Assura owns 603 properties housing GP practices and hospitals in the UK, which serve more than 6 million patients, and many of which are rented to the NHS. They were valued at £3.1bn at the end of March, up from £2.7bn the year before.
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Its rental income climbed by 16.6% to £167m during the year, as the company raised its rents by 3.2%. This meant it moved into the black with a pre-tax profit of £166m, against a loss of £28.7m the year before.
PHP owns 516 properties housing GPs in the UK and Ireland valued at £2.8bn, and made £153.6m in rental income last year.
In early June, KKR pulled out of a deal to inject fresh equity into Thames Water, leaving the troubled supplier’s future in doubt and increasing the prospects of a temporary nationalisation.
