Hedge fund proposes £1bn buyout of UK’s biggest private hospital operator | Healthcare industry
The board of Britain’s largest private hospital operator has backed a £1 billion takeover bid from its second-largest shareholder, the hedge fund manager known as the “Rottweiler”, sending its shares soaring by almost 50%.
Spire Healthcare, which owns Claremont hospital in Sheffield and St Anthony’s hospital in south London, said it had received a non-binding offer of 250p per share from funds advised by activist investor Toscafund Asset Management.
Toscafund was founded in 2000 by Martin Hughes, a long-standing City figure who has been at the forefront of many takeover cases, earning him the nickname “Rottweiler” for his aggressive approach.
Spire said: “The potential cash offer is at a value that the board of directors would unanimously recommend to Spire Healthcare shareholders if a definitive offer were made.”
The share price, which hit a five-year low of 142p in March, rose 47p to 221p on Thursday, giving the company a market value of £892 million.
The Toscafund approach comes after talks between Spire and private equity firms Bridgepoint and Triton collapsed, with Triton pulling out in March. The hospital group announced a strategic review last September and later said it was in talks with various parties to explore a potential sale of the business.
Spire operates 38 private hospitals and more than 60 clinics in England, Wales and Scotland, providing care for 1.36 million patients by 2025. It was founded in 2007 through the acquisition and rebranding of 25 Bupa hospitals and became publicly traded in 2014. Spire acquired a number of other sites and also built two new hospitals in Manchester and Nottingham.
Just under a third of Spire’s revenue comes from work it carries out on behalf of the NHS, such as hip and knee surgeries. More than 85% of NHS commissioning for the health service’s new financial year has been agreed, it said on Thursday, indicating “strong growth” for Spire in the first quarter.
The company stuck to its full-year outlook, saying revenues from private patients, particularly those paying for treatment out of pocket, continued to grow strongly.
Toscafund, which bought telecoms company TalkTalk in a £1.1bn deal in 2021, must declare a firm intention to make an offer for Spire by June 11 or withdraw under UK takeover rules.
In 2021, Australian rival Ramsay Healthcare’s £1bn takeover offer, also pegged at 250p per share, was accepted by Spire’s board but rejected by shareholders.
Peel Hunt, analyst at equity research firm Miles Dixon, said: “Assuming a 250p offer from the second-largest shareholder, we wouldn’t be surprised if this deal goes through.”
Spire’s largest shareholder is Mediclinic, a global private healthcare group that holds just under 30% of the company.
Dixon said Spire’s board was “extremely confident” in its independent strategy and that “regardless of what political theme prevails, so are we in the opportunity for this particular healthcare group in the UK.”
Spire said it has made “significant progress in strengthening the quality of care, diversifying revenue streams and improving efficiency” in recent years.
There are growing concerns among the public and NHS staff that the gradual privatization of healthcare will lead to a two-tier system. Health Minister Wes Streeting has advocated for increased use by the private sector.
NHS landlord Assura was acquired by rival British healthcare investor Primary Health Properties in a £1.8bn deal last August. The acquisition follows an intense takeover battle with US private equity group KKR for Assura’s portfolio of 600 doctors’ practices and other medical facilities serving more than 6 million patients, many of which are leased to the NHS.
