BY Richard Summerfield
Independent hospital group Spire Healthcare Group is to be acquired by Australian hospital operator Ramsay Health in a deal worth $1.42bn.
Under the terms of the deal, Spire shareholders will receive 240p per share, which represents a 24.4 percent premium to Tuesday’s closing price, the day before the deal was announced. The deal will be funded through Ramsay’s existing debt facilities and the company expects to retain its 2021 dividend payout ratio in line with historical levels.
Spire operates 39 hospitals and eight clinics in the UK and posted an adjusted pre-tax loss of $326.80m in 2020, largely due to the COVID-19 pandemic. The company, which treated around 750,000 patients last year, has major contracts with the UK’s NHS network, and was dramatically impacted by the decline in routine patient visits to hospitals during the pandemic. The company expects profit to return to pre-pandemic levels this year.
According to Ramsay, the combination with Spire builds a broader platform to take advantage of the opportunity for sustained growth in the £5.8bn UK private hospital sector.
“Ramsay will work closely with the Department of Health & Social Care to ensure all shared objectives are closely aligned and we stand ready to support the NHS in tackling the significant increase in waiting lists and the return of elective procedures in the UK,” said Craig McNally, chief executive and managing director of Ramsay.
“Spire’s track record of serving self-pay and insured patients will increase patient choice at Ramsay,” he continued. “It will enhance our capacity to work closely with our consultant partners and clinicians to ensure further investment in clinical excellence in all our specialties through the provision of multi-disciplinary care to better service both self-pay and insured patients.”
“The acquisition of Spire will transform our UK business from a financial perspective, with the combination of Spire with Ramsay’s UK business delivering a powerful foundation for further growth by diversifying our payer sources and case mix through Spire’s expertise in acute care and significant exposure to the self-pay and insured patient market,” said Andy Jones, UK chief executive of Ramsay.
Ramsey said it would engage with the UK Competition and Markets Authority (CMA), which may require it to divest certain hospitals and clinics for the deal to go through.
Mediclinic PLC, which holds a 29.9 percent interest in Spire, has indicated it will vote in favour of the offer. The company will receive £287.8m from the sale, which would provide “additional financial flexibility to deliver Mediclinic’s strategic goals including the pursuit of further growth opportunities”.
News: Australia’s Ramsay Health Care to buy UK’s Spire for $1.4 billion