Ann Crotty Writer-at-large
Picture: SOWETAN
Picture: SOWETAN

Ten hours before Monday’s deadline, private hospital group Mediclinic informed the market that it was scrapping its bid to acquire the remaining 70.1% of UK-listed Spire Healthcare Group. The announcement prompted a 4% drop in the Mediclinic share price but much of this fall was recovered before the close of trade on Monday.

Mediclinic said it could not reach a deal with the independent directors of Spire and stressed it “will continue to take a disciplined approach to capital allocation to ensure investments are in the best interests of Mediclinic shareholders”.

Jean Pierre Verster, portfolio manager at Fairtree Capital, said the decision was disappointing because the circumstances currently surrounding Spire in particular, and the UK in general, meant that it was a good time to pursue a bid.

“They are obviously keen to show the market they are disciplined in their capital allocation decisions but hopefully they won’t have to overpay at a later date,” said Verster.

In terms of UK regulations, Mediclinic will have to wait for six months before launching another offer unless there is a change in circumstances.

Mediclinic said it was disappointed it could not reach an agreement with Spire’s independent directors but had every intention of remaining a supportive shareholder of Spire.

Spire said the proposed bid, which was initially valued at £3 per share, undervalued the firm and its prospects.

Spire chairman Garry Watts said they had noted Mediclinic’s decision and welcomed its intention of remaining a supportive shareholder.

He said that the board had carefully considered Mediclinic’s approach but believed “it did not reflect the true value of the company and was not in the best interests of shareholders as a whole”.

Mediclinic acquired the 30% stake it holds in Spire just two years ago for the equivalent of £3.60 a share.

crottya@bdfm.co.za

 

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