Austron said it won't need all of AMP Capital's stake in Acurity to get its partial takeover offer over the line, but it's looking like it may have to tap some of the addition shares on offer with less than a week until the deal closes
Austron, co-owned by Royston Hospital Trust Board and Medusa, is looking to lift its stake in the private hospital operator to 50.01 per cent from 39.9 per cent currently at $6 per share, valuing the firm at just over $103 million.
Royston Hospital Trust Board is a registered charity, and Medusa is controlled by Canterbury rich-lister Mark Stewart. Earlier this year Stewart family interests exited a 10.2 per cent holding in medical equipment supplier Ebos, netting them $37 million which is partly funding the Acurity putsch.
AMP Capital, which holds 15 per cent of Acurity, has agreed to sell a third of its stake into the deal and ideally wanted to keep 10 per cent.
However, it has agreed to make more available in order to get the offer over the line which is now looking more likely given the offer closes at midnight on September 6.
Austron today filed a substantial shareholders announcement saying it controlled 46.56 per cent of Acurity shares.
The offer is a 3.5 per cent premium on yesterday's closing price of $5.80, and 25 per cent above the $4.80 level Acurity's shares were trading at before the partial takeover bid was launched in July.
That's short of the $6.92 to $7.88 per share value placed on the Acurity by an independent adviser.
The firm's independent directors have advised shareholders to reject the bid unless they need short term liquidity, saying Austron's offer was "materially below" the underlying value of the firm.
Royston Hospital Trust Board is a registered charity, and Medusa is controlled by Canterbury rich-lister Mark Stewart.
The offer is almost on par with the $5.99 value brokerage Forsyth Barr has placed on deal - a level that has been consistent for much of this year.
In research note published at the beginning of the week the broker said its valuation reflected the short-term headwinds the private medical sector.
These will are expected to come in the form of the ongoing drop in private health insurance numbers and cut backs by Accident Compensation Corporation and District Health Boards, but it forecasts steady growth in the long-term.
"We continue to hold a positive long-term view on Acurity's outlook, despite the short-term challenges around redevelopment at its Wakefield Hospital site and the weak operating environment," said Rob Mercer, head of private wealth research at Forsyth Barr.
The brokerage predicts the firm will generate earnings before interest, tax, depreciation and amortisation growth of 6 per cent per annum until 2014, paring back to 4 per cent until 2020.
The deal is structured so that shareholders who accept the offer are guaranteed 50.01 per cent of their share will bought, with any acceptances over that level acquired on a scaled basis until Austron hits its target ownership level.
Forsyth Barr says the partial takeover offer for Acurity Health is a win-win for investors, allowing them to either cash-in on short term gains or maintain an exposure to the firm's long term prospects, or presumably both.
Austron yesterday appointed Forsyth Barr to handle all acceptances on the deal, a typical arrangement under takeover rules.