PHP still 'best option' for Assura despite new KKR bid, says Shore Capital
Shore Capital has retained a 'hold' rating for Assura following the news that the company has accepted an increased cash offer from KKR, saying that alternative suitor Primary Health Properties still represents the "best option" for shareholders.
The healthcare property investment and management firm said on Wednesday that it has agreed to an increased and final 52.1p-a-share offer from from KKR and Stonepeak valuing the company at around £1.7bn.
The announcement comes days after Assura said due diligence in relation to a rival 51.7p takeover proposal from Primary Health Properties was still ongoing, with both parties "working closely" together.
According to Shore Capital analyst Andrew Saunders, the best option for Assura's shareholders would be to reject the KKR/Stonepeak big and accept the PHP offer and remain invested in a listed company, with the merger of the two complimentary businesses creating "a new powerhouse in a sector with attractive long-term growth prospects".
"While the new offer marginally exceeds that of PHP for the here and now, as we have consistently sad, the real value of PHP's offer stems from remaining listed. We continue to believe that PHP provides the best option for Assura shareholders with the recent trading update presenting a picture of Assura as a business performing well, with rents accelerating, development picking up, EPRA NTA growing and prospects looking brighter," Saunders said.
"Shareholders must surely now ask themselves why now would be the best time to leave the Assura journey?... accepting that the [KKR/Stonepeak] cash offer materially undervalues the business (placing no value on the operating platform or debt book) and hands the business at the bottom of the cycle to private equity, leaving them to benefit from the future double-digit returns."
Assura shares were up 2.1% at 49.94p by 1045 BST.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.