REG - Primary Health Props Assura plc - Statement regarding offer by PHP for Assura

AssuraAnnouncement

Yesterday 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250613:nRSM7535Ma&default-theme=true

RNS Number : 7535M  Primary Health Properties PLC  13 June 2025

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

FOR IMMEDIATE
RELEASE

 

13 June 2025

 

Statement regarding shares and cash offer by Primary Health Properties PLC for
Assura plc

·      Consent to accelerate October Assura quarterly dividend

·      Lowering of Acceptance Condition to PHP Offer

·      Response to Assura Announcement

 

1.   Introduction

The Board of Primary Health Properties PLC ("PHP" or the "Board") notes the
announcement by Assura plc ("Assura") on 11 June 2025 (the "Assura
Announcement") setting out Assura's views on the firm offer for Assura
announced by PHP on 16 May 2025 (the "PHP Offer") and the Assura Board's
recommendation of the offer by Sana Bidco Limited ("Bidco") announced on 11
June 2025 (the "Bidco Offer").

The Board continues to firmly believe that a combination of Assura and PHP
(the "Combination") represents a highly compelling proposition which will
deliver significant strategic, operational and financial benefits for both
sets of shareholders.

This is underpinned by the Board's belief that the sector is at an inflexion
point in the current economic cycle with strong rental growth and lower
interest rates enhancing primary care property values and with net asset
values per share expected to continue to improve.

The Board notes that, based on the closing PHP share price of 103.0 pence per
share on 12 June 2025, being the last trading day before the date of this
announcement, the PHP proposal implies a total value of 53.0 pence per share
(the "Offer Value"), inclusive of the Assura April dividend already paid and
the Assura July dividend declared on 19 May 2025. This implies a premium of
1.7 per cent. to the Bidco Offer.

2.   Accelerated quarterly dividend

Under the terms of the PHP Offer, PHP announces that it will not reduce the
value of the PHP Offer if the Assura Board declares a special dividend (the
"Special Dividend") conditional on the Offer becoming Unconditional, of up to
a maximum of 0.84 pence per Assura Share, in lieu of and representing an
acceleration of the dividend expected to be paid to Assura Shareholders during
October 2025, in the ordinary course, based on Assura's usual timetable.

PHP look forward to confirmation from the Assura Board of the Special
Dividend.

3.   Matching Acceptance Condition as the BidCo Offer

In order to increase the certainty of execution, the Acceptance Condition (as
defined in the PHP Offer), will be reduced to PHP having received acceptances
of the Offer in respect of Assura Shares representing more than 50 per cent of
the voting rights normally exercisable at a general meeting of Assura
Shareholders, which is the same acceptance condition as the Bidco Offer.

Further details will be provided within the PHP Offer Document to be published
in due course.

4.   Response to the Assura Announcement

PHP strongly disagrees with certain assertions made by the Board of Assura in
the Assura Announcement around the financial risks to the Combination. In
addition, whilst the Assura Board has cited the due diligence undertaken with
PHP, the Board of PHP has concerns around the level of engagement,
objectiveness and responsiveness in this process.

The Board welcomes the acknowledgement by the Board of Assura that the PHP
Offer has certain "potential benefits" and urges the Board of Assura to
consider carefully the points below which address the assertions made
concerning the PHP Offer. The Board believes that with further due diligence
and consideration, and factoring in the Special Dividend, the Board of Assura
should recommend the Combination to shareholders.

·      Financial risk

The Assura Board states that (i) "the cash element of the PHP Offer would
result in a level of leverage significantly exceeding the target loan-to-value
ratios of Assura and PHP"; and (ii) "approximately £2 billion of refinancing
obligations over the next two to three years…..near-term maturities expose
Assura shareholders to adverse changes in financing costs…"

PHP Response: Clear plan to reduce leverage, targeting strong investment grade
credit rating

The PHP Board believes these statements do not accurately reflect the
structure and rationale of the PHP Offer, with its clearly stated plan for
reducing leverage and the nature of the acquisition financing arrangements,
principally:

 ·             Leverage will only temporarily be greater than target range with the planned
               disposals reducing leverage to within the target range of 40 - 50 per cent.
               loan-to-value in the short-term;
 ·             Fitch confirmed in their report of 19 May 2025 that Assura would remain
               investment grade following the Combination;
 ·             The Combined Group expects to obtain, post completion, its own investment
               grade rating accelerating PHP's transition towards an unsecured debt structure
               of scale;
 ·             PHP's £1.225 billion acquisition facilities include commitments in respect of
               existing short-term maturities, including repayment of the £322 million of
               PHP debt due to mature in the next 18-24 months, with no further PHP debt
               maturities expected until the fourth quarter of 2027;
 ·             PHP has obtained a change of control waiver and expects to obtain an extension
               in respect of the £266 million Barclays term loan to Assura, which would
               extend maturity to late 2027, and include further extension options which, if
               agreed, would further extend the maturity of this loan to 2029;
 ·             With Assura's consent PHP continues to have positive discussions with lenders
               and private placement loan note holders regarding further change of control
               waivers; and
 ·             PHP believes the majority of Assura's existing lending stakeholders would
               prefer to see a Combination with a more transparent and robust corporate
               governance structure rather than the uncertainty and opaque structure typical
               of private equity transactions.

 

Through the combination of an expected strong investment grade credit rating,
greater access to the public bond markets, which is the deepest pool of
capital for unsecured borrowers, and close bank lending relationships, the PHP
Board believes it has diverse sources of cost effective and long-term
financing options. The PHP Board has extensively consulted with both sets of
shareholders following the PHP Offer and does not consider that the
refinancing risk highlighted by the Assura Board is significant. Furthermore
the PHP Board believes that there are significant potential cost of capital
benefits from the Combination.

·      Execution risk

The Assura Board states that: "with the benefit of its experience in
conducting disposals and knowledge of the relevant private hospital
market… it  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"

PHP Response: Strong confidence in execution of deleveraging plan

The PHP Board is highly confident in its ability to deliver its stated
disposal programme, having received strong interest and positive sentiment
towards both primary healthcare assets and private hospital properties for the
stated joint venture disposal structure.

Recent sales processes for private hospital portfolios have seen, and continue
to see, strong interest from a number of potential acquirers, including in the
process culminating in Assura's acquisition of its portfolio of private
hospitals in the second half of 2024. Furthermore, the competitive situation
for Assura and its joint venture with USS, which Assura entered into in 2024,
demonstrate the weight of capital seeking to invest in healthcare real estate.

The PHP Board believes that strong investor interest in this asset class is
underpinned by: (i) the long-dated inflation linked leases which provide
greater certainty of rental growth (as the Board of Assura highlights in the
Assura Announcement); and (ii) growing demand for private healthcare services
and few  portfolios of scale, including as referenced by Assura's CEO
Jonathan Murphy at the time of the acquisition of the hospital portfolio:
"This represents a unique opportunity to participate in the growing demand for
private healthcare services to help ease growing NHS waiting lists".

PHP has had preliminary discussions with a number of highly credible potential
joint venture partners and based on these discussions, which the Board of PHP
would expect to progress with in due course and in particular once fuller
information is made available on the Assura portfolio, along with the
favourable wider market conditions referred to above, the PHP Board is
confident that it will be able to execute a transaction on acceptable terms,
that would enable PHP to reduce its loan-to-value ratio to within its existing
target range of 40 - 50 per cent. in the short-term.

·      Reduced exposure to long-dated, inflation-linked leases

The Board of Assura stated in its announcement on 11 June 2025 that "A
combination with PHP, together with planned disposals of Assura's private
hospital portfolio 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"

PHP Response: PHP's core focus is long-leased, primary healthcare assets
leased to government tenants

The Board of PHP believe that the composition of the combined portfolio would
deliver a higher exposure to state-backed income and would provide significant
benefits for shareholders of the combined group, including:

 ·             A £6 billion portfolio of long-leased, sustainable infrastructure assets
               principally let to government tenants and leading UK healthcare providers,
               benefiting from increased income security, longevity, diversity of product
               type, geography and mix of rent review types;
 ·             Combined ability to realise embedded rental increases and back rent arising
               from the significant number of outstanding open market rent reviews across
               both portfolios; and
 ·             Expected retention of an equity position, and additional management fee
               income, in respect of the private hospital assets, with these being sold into
               a joint venture.

 

Furthermore, the Board of PHP views the income profile and growth outlook of
index-linked private hospital leases as similar to open market rent leases,
particularly given caps and collars within the index-linked leases, whereby
the rent is determined by the District Valuer with reference to inflation.

·      Integration risk

The Board of Assura has outlined in its announcement "the Assura Board
believes these concurrent activities [portfolio sales, refinancing and
realisation of synergies] would introduce heighted execution risk and
operational disruption with corresponding financial uncertainty"

PHP Response: PHP is an experienced owner of primary care properties, with a
track record of delivering integration plans and relative outperformance
versus Assura on Total Property Returns in every reported full year since 2017

The Board highlights:

 ·             PHP has outperformed Assura on Total Property Returns by 11.8 per cent over
               the last reported three year period, 17.5 per cent over the last reported five
               year period and by 20.9 per cent over the last reported seven year period;
 ·             PHP has experience and a track record of successfully executing a public
               merger, demonstrated by the successful acquisition and integration of MedicX
               Fund Limited in 2019;
 ·             As set out above, there are no short-term refinancings to be managed and PHP
               will have significant liquidity headroom post the Combination to allow it to
               continue to deliver accretive asset management initiatives and development
               projects;
 ·             Synergy realisation is expected to accrue 60 per cent. from reduction in
               overlapping roles and 20 per cent. from rationalisation of duplicative costs
               neither of which pose significant operational or day-to-day risks to the
               business; and
 ·             The businesses are, on a headcount basis, small in scale, with highly
               complementary portfolios, some commonality in software systems and overlap in
               business models

 

PHP remains ready to engage in dialogue with Assura to address their concerns
and work towards the creation of a leading UK income focussed REIT, supported
by a structural undersupply of modern primary care properties and favourable
government policy.

The Board of Assura has also outlined in its announcement "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"

PHP Response: PHP has proactively notified the terms of the Combination to the
CMA and has begun the process of pre-notification dialogue with the CMA. To
date Assura has refused to provide the relevant documents directly to PHP,
which could have the effect of unnecessarily delaying the regulatory clearance
process

The PHP Board highlights:

 ·             Based on its analysis to date, PHP does not believe there to be any
               substantive competition issues or overlaps in the relevant jurisdictions; and
 ·             PHP is actively seeking to obtain the cooperation of Assura to provide
               documents to PHP's advisors as soon as possible so as to permit PHP to submit
               this information to the CMA in the shortest possible timescale

 

PHP has sent to Assura a follow up request for cooperation by way of the early
provision by Assura to PHP in the usual way of these documents and will
continue to press the Assura Board to cooperate to assist PHP with the
completion of its regulatory clearances. PHP continues to work diligently with
the relevant authorities to ensure all necessary filings are made and the
approvals obtained as quickly as possible.

A further announcement will be made when appropriate.

Assura shareholders are strongly advised to take no action in response to the
Bidco Offer.

Enquiries:

 PHP                                                          +44 (0) 7970 246 725

 Harry Hyman, Non-Executive Chair                             via Sodali & Co

 Mark Davies, Chief Executive Officer

 Richard Howell, Chief Financial Officer

 Rothschild & Co (Joint Lead Financial Adviser to PHP)        +44 (0) 207 280 5000

 Alex Midgen

 Sam Green

 Nikhil Walia

 Jake Shackleford

 Deutsche Numis (Joint Lead Financial Adviser to PHP)         +44 (0) 207 260 1000

 Kevin Cruickshank

 Heraclis Economides

 Stuart Ord

 Ben Stoop

 Jack McLaren

 Citi (Joint Financial Adviser to PHP)                        +44 (0) 20 7986 4000

 Bogdan Melaniuc

 James Ibbotson

 Robert Redshaw

 James Carton

 Michael Mullen

 Peel Hunt (Joint Financial Adviser and Joint Broker to PHP)  +44 (0) 20 7418 8900

 Capel Irwin

 Michael Nicholson

 Henry Nicholls

 Sodali & Co (Communications for PHP)

 Rory Godson                                                  +44 (0) 7970 246 725

 Elly Williamson

 Louisa Henry

CMS Cameron McKenna Nabarro Olswang LLP are retained as legal adviser to PHP.

The person responsible for arranging the release of this announcement on
behalf of PHP is Toby Newman, Company Secretary.

 

Further information

N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is
authorised and regulated by the Financial Conduct Authority in the United
Kingdom, is acting exclusively for PHP and for no one else in connection with
the subject matter of this announcement and will not be responsible to anyone
other than PHP for providing the protections afforded to its clients or for
providing advice in connection with the subject matter of this announcement.
This announcement is not intended to and does not constitute an offer to sell
or the solicitation of an offer to subscribe for or buy or an invitation to
purchase or subscribe for any securities or the solicitation of any vote in
any jurisdiction.

Numis Securities Limited ("Deutsche Numis"), which is authorised and regulated
in the United Kingdom by the Financial Conduct Authority, is acting
exclusively for PHP and no one else in connection with the matters set out in
this announcement and will not regard any other person as its client in
relation to the matters in this announcement and will not be responsible to
anyone other than PHP for providing the protections afforded to clients of
Deutsche Numis, nor for providing advice in relation to any matter referred to
herein. Neither Deutsche Numis nor any of its affiliates (nor any of their
respective directors, officers, employees or agents), owes or accepts any
duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is
not a client of Deutsche Numis in connection with this announcement, any
statement contained herein or otherwise.

The release, publication or distribution of this announcement in jurisdictions
outside the United Kingdom may be restricted by law and therefore persons into
whose possession this announcement comes should inform themselves about, and
observe such restrictions. Any failure to comply with such restrictions may
constitute a violation of the securities law of any such jurisdiction.

 

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.

 

Rule 26.1 disclosure

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available at www.phpgroup.co.uk promptly and in any event by no later than 12
noon on the business day following this announcement. The content of this
website is not incorporated into and does not form part of this announcement.

 

Profit Forecasts and Estimates

No statement in this announcement is intended to constitute a profit forecast
or profit estimate, no statement in this announcement is subject to the
requirements of Rule 28 of the Code and no statement in this announcement
should be interpreted to mean that the earnings or future earnings per share
of or dividends or future dividends per share of PHP and/or Assura for current
or future financial years will necessarily match or exceed the historical or
published earnings or dividends per share of PHP or Assura, as appropriate.

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  OFBSFWSIDEISELM