Britain’s Spire sees shares rise after rejecting £1.2bn Mediclinic takeover

Mediclinic bought out the UAE’s Al Noor Hospital Group just last year, dragging down the profitability of its Middle Eastern operations

The company’s Middle East revenues jumped about 5 per cent to Dh1.5 billion on the back of “the characteristically quieter” first half. Reuters

UK-based private hospital chain Spire Healthcare has rejected a £1.2bn (Dh5.8bn) takeover offer from South Africa’s Mediclinic, arguing the international firm had undervalued the company and its prospects.

Mediclinic, which already owns nearly 30 per cent of Spire, made an offer of 150p a share in cash and 0.232 new Mediclinic shares per Spire share to acquire the rest.

Just last year Mediclinic took over Abu Dhabi’s Al Noor Hospital Group, leaving analysts wondering whether the company was in the best position to acquire another big asset so soon.

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"MDC is still turning around the Al Noor asset it acquired in the UAE, and we are unsure of MDC’s shareholders’ appetite for another large transaction so soon," said James Vane-Tempest, an analyst at Jefferies.

In April, Mediclinic said its healthcare businesses in Abu Dhabi had dragged down the profitability of its Middle Eastern operations because of regulatory changes that made it more expensive for Emiratis to get treatment.

In response to the rejected bid, Spire said in a statement that it had reviewed the proposal, which it said significantly undervalued Spire and its prospects.

“Shareholders are strongly advised to take no action in relation to the proposal,” the company said on Monday. “There can be no certainty that an offer will be made, or as to the terms on which any offer might be made.”

As news of the rejected bid was confirmed, Spire’s shares rose by 11 per cent to 290 pence, the most since September 2016, and putting the company on track for its biggest-ever daily gain. In contrast in London, shares of Mediclinic dropped 0.4 percent to 638 pence.

Mediclinic has until 5pm on November 20 to make a firm offer for Spire or abandon the takeover. The South African company said it was now considering its position and made no comment on whether it was going to pursue the approach.

Uncertainty over whether Britain’s state-funded National Health Service will be able to cope once the country leaves the European Union in 2019 has made Spire, the second largest private healthcare provider in the UK, a more attractive prospect for companies such as Mediclinic and Johannesburg-listed Netcare Ltd.

“Spire would provide a sizeable UK market presence where MDC [Mediclinic] already has working knowledge with likely no anti-trust issues,” analyst Mr Vane-Tempest added.

Spire made its stock market debut in 2014, having been formed in 2007 from the sale of Bupa Hospitals to private equity firm Cinven in 2007. Mediclinic acquired its 29.9 per cent stake in Spire from Cinven in 2015 for about £430 million.