Cashed-up bidders for Acurity confident

17:00, Jul 28 2014

A takeover offer has been launched for Wellington-based listed company Acurity at $6.50 a share, with the bidders confident of success even though the price is below an earlier independent valuation for the company.

The shares were trading at $6.58 late yesterday, slightly above the offer price, with about 92,000 shares traded.

Formerly Wakefield Health, Acurity has three private hospitals in Wellington and Hawke's Bay, offering surgical healthcare services.

The bidders say Acurity faces capital spending of about $50 million to bring its flagship Wellington hospital up to earthquake code or possibly build a new hospital on part of the existing site.

Connor Healthcare, a company jointly established by the two principal shareholders in Acurity, yesterday made a bid of $6.50 a share to buy the balance of the shares it does not own in the private healthcare provider.

The partners in Connor already hold about 70 per cent of Acurity shares.


One of the key bidders is Mark Stewart, representing Christchurch-based Stewart family interests.

Stewart is the son of the late Sir Robertson Stewart, who founded large electrical firm PDL, which was sold to the French.

The all-cash offer represents a premium of 24 per cent above the closing price on the NZX Main Board of $5.25 on July 25 of Acurity's shares. The offer values Acurity at $112m in total.

Acurity chief executive Ian England said shareholders should not do anything till they had seen the independent report, which would be sought by a committee of independent directors in coming weeks.

In 2012, an outside report valued Acurity's shares at between $6.92 and $7.88 each.

A source said the key shareholders in the company who launched the takeover bid yesterday would be in a good position to know if spending $50m on a new Wakefield Hospital would actually add to the value of Acurity, which may do better in the Wellington market with an upgraded facility.

In 2012 when the work on Wakefield was first proposed, the company indicated it would cost between $20m and $25m to strengthen the existing building.

England said yesterday the $50m figure was an estimate by brokers Forsyth Barr but was a "reasonable figure" for the options, though no detailed costings had been done yet.

Meanwhile, most big institutional shareholders have dropped out of Acurity. That is because it is a relatively small company and its shares are not often traded, because of the big cornerstone holdings and shares held by doctors involved in the business.

As a result, Acurity shares were seen as "one for the patient investor", a source said.

Acurity bought into Royston Hospital in Hawke's Bay, which was the only private hospital in the area, and had done well out of that. Its joint venture in Tauranga had also been successful. But the company had not achieved the sort of scale it might have aspired to.

Connor's spokesman, Mark Stewart, said yesterday the offer would be attractive to Acurity's shareholders, who have seen meagre total returns over the past four years.

Speaking from the United States, Stewart said he was confident of getting over the line with the bid. "It is a compelling offer."

Shareholders would get an independent valuation report on the bid, commissioned by other directors.

"But this is the highest price shareholders have seen for four years," Stewart said.

If the bid did not go through, then he expected the share price to dwindle.

Connor said: "Acurity faces formidable challenges including considerable expenditure estimated at approximately $50 million to meet the earthquake code requirements at its flagship hospital in Wellington.

"This capital expenditure represents between $2 and $3 a share purely to maintain the existing capacity at the hospital."

The takeover offer, which is subject to conditions set out in the Takeover Notice, including a 90 per cent minimum acceptance condition and approval from the Overseas Investment Office, is expected to be sent to Acurity shareholders on August 26.

AMP holds 6.16 per cent of Acurity and will wait for the independent report. AMP's Guy Elliffe said it would be "patiently waiting for the response from the board" to the takeover offer.


Cash of $6.50 a share for all the fully paid ordinary shares of Acurity.

The offer price represents a 24 per cent premium to the closing price of Acurity's shares on the NZX on July 25.


Connor Healthcare, a company jointly established by the two principal shareholders in Acurity. Connor is a company that will be 75 per cent owned by Austron (a company jointly owned by the Royston Hospital Trust Board and interests associated with the Stewart family of Christchurch) and 25 per cent owned by Sydney-based Evolution Healthcare (NZ) Pty Limited when the takeover offer is satisfied.

Austron and associated parties currently hold 59.07 per cent of the shares in Acurity and Evolution controls 11.7 per cent of its shares.

In 2012 a partial takeover offer for Acurity Health was made at $6 a share, but independent directors advised shareholders to reject the offer because it was "materially below" the underlying value of the company ranging between $6.92 and $7.88 apiece.



Wakefield Hospital

Bowen Hospital

Hawke's Bay:

Royston Hospital


60 per cent joint venture ownership of Tauranga's Grace Hospital owner Norfolk Southern Cross.


30 per cent equity investment in Endoscopy and Laparoscopy Auckland.