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US private equity houses continue to ramp up deal activity, with three firm offers announced for the FTSE 250. Additionally, Australian healthcare provider, Ramsay Health Care Limited (Ramsay) announced a firm offer for FTSE All-Share’s Spire Healthcare Group plc (Spire). 

On 26 May 2021, FTSE 250 inhaled medicines developer, Vectura Group plc (Vectura) that it had reached agreement for the terms of a recommended cash offer with The Carlyle Group. Vectura is one of few global companies with the device, formulation and development capabilities for inhaled medicines and partners include Hikma, Novartis, Bayer and GlaxoSmithKline. The offer values Vectura at £958m, at £1.55 per share (inclusive of a 19 pence cash dividend) and represents a 32% premium to the closing price one day prior to the announcement. Vectura’s share price jumped by 33.8% at the close of business on the day of the announcement.  

In regards to the transaction, The Carlyle Group noted that it is fully supportive of Vectura’s transition to a CDMO business model in the inhalation segment (which started in 2019) and believes a private market will allow this transition to be more effectively realised with its access to institutional knowledge and greater financial flexibility.

Bruno Angelici, Vectura’s chairman, said the following of the offer:

“While the Vectura Directors remain confident in the long term fundamentals of the Vectura Group, we believe that this is an attractive offer for Vectura Shareholders, which secures the delivery of future value for Vectura Shareholders in cash today.”

Wednesday 26 May 2021 saw another firm offer in the healthcare sector, with the of a recommended cash offer by Ramsay Health Care Limited (Ramsay) for Spire, one of the UK’s largest private hospital groups. The offer will be effected through Ramsay’s wholly owned subsidiary, Ramsay Health Care (UK) Limited (Ramsay UK). Ramsay UK currently operates 37 healthcare facilities and the takeover would combine Spire’s 47 facilities to create a leading services provider in the UK. 

The offer values Spire at £999.6m, at £2.40 per share and represents a 24.4% premium to the closing price one day prior to the announcement. The pandemic had a clear effect on Spire’s business, in its , Spire revealed that it had had suffered a £233.9m loss, in contrast to its 2019 results which saw the company receive a £7.2m profit. Despite the disappointing financial results, both Ramsay and Spire expect a long-term growth opportunity in the UK with increased NHS outsourcing and private demand as a result of the backlog created by the COVID-19 pandemic. The Ramsay board believes that the synergies created as a result of the takeover will be transformational to its UK business. Spire’s share price soared by 26.9% at the close of business on the day of the announcement of the firm offer.

Mediclinic International plc (a South African private hospital group) and the former chairman of Spire represent 29.9% and 0.2% shareholding respectively, and have given support for the offer in providing irrevocable undertakings to vote in favour of the scheme. 

Justin Ash, CEO of Spire, said the following of the offer:

“The highly complementary combination of Spire and Ramsay presents a unique opportunity to accelerate this progress, will increase choice to private and NHS patients across the UK and will offer a platform where our colleagues, consultant partners, businesses, and broader stakeholder group, including the NHS, can continue to deliver a positive difference to patients.”

Following from Market Tracker’s coverage of the possible offer announced by FTSE 250 real estate developer St. Modwen Properties plc (St. Modwen), on 20 May 2021, it was that agreement had been reached with The Blackstone Group (Blackstone) on the terms of a recommended all cash offer, which valued St. Modwen at £1.24bn. Despite objections from J O Hambro Capital Management that the deal value in the possible offer was too low, Blackstone did not increase the offer value in its firm value. Irrevocable undertakings representing 6.59% of issued capital were received from St. Modwen’s directors and members of founder Stanley Clarke’s family.

With a £600bn investment into infrastructure by the UK government to offset the effects of the COVID-19 pandemic, the sector presents an attractive opportunity for those seeking returns. On 19 May 2021, FTSE 250 infrastructure company John Laing Group plc (John Laing) that it had reached an agreement with private equity house KKR & Co. L.P. for a recommended cash offer that valued the company at £2bn. The offer will have John Laing shareholders receive £4.03 per share and represents a 27% share premium to John Laing’s closing share price one day prior to the announcement.

These deals represent the ongoing trend of foreign bidders and P2P transactions that Market Tracker has observed (see our Q1 2021 Public M&A update and Foreign Companies in UK shopping spree).  Market Tracker will provide an update on these trends and more in its upcoming H1 2021 trend report.

 Market Tracker will continue to monitor these transactions as they develop.