Assura plc (“Assura”)
Recommended Best and Final* Increased Cash Offer from Sana Bidco Limited
Background
On 9 April 2025, the boards of Sana Bidco Limited (“Bidco”) and Assura announced that they had reached an agreement on the terms of a recommended cash offer for the entire issued and to be issued ordinary share capital of Assura by Bidco, to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006. Bidco is a newly formed company indirectly wholly owned by (i) funds advised by Kohlberg Kravis Roberts & Co. L.P. and its affiliates (“KKR”) and (ii) funds advised by Stonepeak Partners LP and its affiliates (“Stonepeak”).
On 16 May 2025, Primary Health Properties plc (“PHP”) announced its firm intention to make a share and cash offer for the entire issued and to be issued ordinary share capital of Assura (the “PHP Offer”) under Rule 2.7 of the Takeover Code. On 23 May 2025, Assura announced that it had commenced due diligence in relation to PHP to determine whether to recommend the PHP Offer to Assura Shareholders and, as a result, had decided to adjourn the Court Meeting and the General Meeting (the “Meetings”) required to implement the Cash Offer from Bidco. On 6 June 2025, Assura subsequently announced that the Meetings had been formally adjourned until further notice.
Assura now confirms that the boards of Bidco and Assura have reached agreement on the terms of a recommended best and final* increased cash offer (the “Best and Final* Increased Cash Offer”) for the entire issued and to be issued ordinary share capital of Assura.
Recommended Best and Final* Increased Cash Offer from Sana Bidco Limited
Under the terms of the Best and Final* Increased Cash Offer, Assura Shareholders will be entitled to receive 50.42 pence in cash (the “Cash Consideration”). In addition, Assura Shareholders:
- retained the quarterly interim dividend of 0.84 pence announced on 18 February 2025 and which was paid on 9 April 2025 (the “April Dividend”); and
- will retain the quarterly interim dividend of 0.84 pence announced on 19 May 2025 and which will be paid on 9 July 2025 (the “July Dividend” and, together with the April Dividend, the “Declared Dividends”).
The Best and Final* Increased Cash Offer therefore implies a total value of 52.1 pence for each Assura Share, inclusive of the Declared Dividends, and values the entire issued and to be issued ordinary share capital of Assura at approximately £1,696 million on a fully diluted basis. The Best and Final* Increased Cash Offer represents a premium to Assura’s EPRA NTA per Assura Share of 50.4 pence as at 31 March 2025.
* The financial terms of the Best and Final* Increased Cash Offer are final and will not be increased, except that Bidco reserves the right to increase the financial terms of its offer where the Panel otherwise provides its consent (which will only be provided in wholly exceptional circumstances).
The Best and Final* Increased Cash Offer together with the Declared Dividends represents a premium of approximately:
- 39.2 per cent. to the Closing Price of 37.4 pence per Assura Share on 13 February 2025, being the last Business Day prior the commencement of the Offer Period on 14 February 2025;
- 41.2 per cent. to the volume weighted average price of 36.9 pence per Assura Share for the one-month period ended 13 February 2025; and
- 37.7 per cent. to the volume weighted average price of 37.8 pence per Assura Share for the three-month period ended 13 February 2025.
Ed Smith, Non-Executive Chair of Assura, commented:
“The Board’s decision to recommend the offer from KKR and Stonepeak follows a careful and thorough evaluation of both offers, during which the Board has been firmly focused on its fiduciary duty to shareholders. KKR and Stonepeak are highly experienced investors in healthcare and infrastructure and I am confident that with their support, and the additional capital they will provide, Assura will continue to deliver the high-quality healthcare infrastructure our communities need.”
Bidco has confirmed that the Best and Final* Increased Cash Offer is to be effected by way of a takeover offer (as defined in section 974 of the Companies Act) and requires as a condition that acceptances are received by Bidco in respect of, or Bidco otherwise acquires or unconditionally contracts to acquire, more than 50 per cent. of the Assura Shares subject to the Best and Final* Increased Cash Offer. The Assura Board believes that Bidco’s decision to switch to the Takeover Offer (with the consent of Assura and the Takeover Panel) provides greater certainty for Assura Shareholders.
Assura has been notified by Bidco that clearances from the State Administration for Market Regulation of the People’s Republic of China, the Israeli Competition Authority and the Korea Fair Trade Commission have been received. Accordingly, conditions 3(a), 3(c) and 3(d) set out in Part A of Part 3 of the Scheme Document have been satisfied. Bidco is expected to have obtained all necessary clearances in respect of the Best and Final* Increased Cash Offer by the end of June 2025.
Recommendation
The Assura Directors, who have been so advised by Lazard as to the financial terms of the Best and Final* Increased Cash Offer, consider the terms of the Best and Final* Increased Cash Offer to be fair and reasonable. In providing their advice to the Assura Directors, Lazard have taken into account the commercial assessments of the Assura Directors. Lazard is providing independent financial advice to the Assura Directors for the purposes of Rule 3 of the Takeover Code.
The Assura Directors consider that the terms of the Best and Final* Increased Cash Offer are in the best interests of Assura Shareholders as a whole. Accordingly, the Assura Directors intend to unanimously recommend that the Assura Shareholders accept, or procure the acceptance of, the Best and Final* Increased Cash Offer as the Assura Directors who hold interests in Assura Shares have irrevocably undertaken to do in respect of their own legal and/or beneficial holdings over which they have control, being in aggregate 4,638,828 Assura Shares (representing approximately 0.1 per cent. of the existing issued ordinary share capital of Assura) as at 10 June 2025 (being the last Business Day before the date of this Announcement).
Further details of the relevant background to the Assura Board’s intended recommendation are set out in the section entitled “Background to and reasons for the recommendation” in Part 1 of the Scheme Document. The Assura Board believes that the Best and Final* Increased Cash Offer represents a compelling opportunity for Assura Shareholders to achieve a significant realisation of their investment in Assura at a higher value, and at materially less risk, than the PHP Offer, as set out below.
In the light of its recommendation that Assura Shareholders accept the Best and Final* Increased Cash Offer, the Assura Board is not recommending the PHP Offer and advises Assura Shareholders to take no action in relation to the PHP Offer.
The PHP Offer
Following the PHP Offer of 16 May 2025, Assura has undertaken several weeks of detailed due diligence and consultation with PHP and its advisers. The Assura Board has concluded that the PHP Offer presents material risks and downsides to Assura Shareholders which undermine the potential benefits of the proposed combination under the PHP Offer:
- Financial risk: The cash element of the PHP Offer would result in a level of leverage significantly exceeding the target loan-to-value ratios of both Assura and PHP. In addition, the combined group would face approximately £2 billion of refinancing obligations over the next two to three years arising from the acquisition facilities and the near-term maturities of existing in-place debt across both Assura and PHP. The increased leverage and these near-term maturities expose Assura Shareholders to adverse changes in financing costs which could negatively affect the earnings profile of the combined group.
- Execution risk: The Assura Board notes the intention of PHP to reduce leverage of the combined group through asset disposals, including that of Assura’s portfolio of UK private hospitals. The Assura Board, with the benefit of its experience in conducting disposals and knowledge of the relevant private hospital market, has considered this plan in detail and is concerned about the execution risk associated with the required size and timing of these disposals and the acceptability of the terms that might be available to the combined group especially under the PHP stated joint venture disposal structure.
- Reduced exposure to long-dated, inflation-linked leases: Following Assura’s successful strategic pivot towards becoming a more diversified healthcare REIT investing in a range of healthcare assets, Assura’s and PHP’s strategies have diverged. While Assura has diversified its portfolio by expanding into the private healthcare market, targeting longer-term, inflation-linked leases, PHP has remained focused on public sector surgery properties. A combination with PHP, together with the planned disposals of Assura’s private hospital assets, would significantly dilute Assura Shareholders’ exposure to private healthcare assets, the majority of which benefit from long-dated inflation-linked leases which provide greater certainty of rental growth than OMR leases. The portfolio of the combined group would be more weighted towards shorter length (on average) OMR leases, which have historically seen lower rental growth than inflation.
- Impact on Assura asset quality, growth prospects and ability to support the NHS: The limitations placed on the combined group by its elevated leverage and by the need to undertake significant asset disposals would, the Assura Board believes, restrict both investment and development expenditure, as well as reduce Assura’s ability to maintain, upgrade and modernise its older assets with the consequential impact on earnings growth of the combined group. As such, the Assura Board believes that the PHP Offer would impact the ability of the combined business to support the NHS in respect of the assets it needs in order to deliver critical services to its patients.
- Integration risks: The Assura Board has considered the risks and implications of undertaking significant portfolio disposals and refinancing activities at the same time as integrating the two businesses to deliver PHP’s estimated annualised run-rate cost synergies of approximately £9 million. The Assura Board believes these concurrent activities would introduce heightened execution risk and operational disruption with corresponding financial uncertainty. Finally, while the Assura Board notes that CMA clearance is not a condition of the PHP Offer, Assura Shareholders would still bear a risk in this regard as an extended review would risk delaying PHP’s disposal programme.
The Assura Board believes that Bidco’s Best and Final* Increased Cash Offer provides the certainty of cash today to Assura Shareholders, alongside long-term capital to fund significant investment in the UK’s healthcare infrastructure and support investments in the NHS estate.
Timetable
It is anticipated that Bidco will publish and post the Offer Document (together with a form of acceptance) (where applicable) to Assura Shareholders (other than Assura Shareholders located in any Restricted Jurisdictions, in each case, where to do so would violate the laws of that jurisdiction) within 28 days of the date of this Announcement, or such later date as the Panel may determine in accordance with the Takeover Code.
Further details of the expected timetable will be set out in the Offer Document, together with instructions regarding how Assura Shareholders can accept the Best and Final* Increased Cash Offer.
This Announcement has been made with the consent of Bidco and without the consent of PHP.