Primary Health Properties PLC (LSE:PHP, OTC:PHPRF) has launched a rival bid for Assura Group (LSE:AGR), which has already backed a possible offer from a US consortium made up of KKR and Stonepeak Partners.
Intriguingly, PHP has not looked to beat the KKR-led £1.6 billion offer for its fellow healthcare property peer, which was priced at 49.4p per share.
Instead, the FTSE 250 group has proposed an offer of 9.08p of cash and 0.3848 new PHP shares for each Assura share held, which gives a valuation of £1.5 billion.
This is based on yesterday's closing PHP share price of 94.35p and the 9.08p cash consideration, implying a value of 46.2p per Assura share, including a dividend of 0.84p a share due to be paid next week.
This is a 23.5% premium to Assura's closing share price on 13 February, prior to it entering an offer period with KKR and Stonepeak.
PHP, which previously made a preliminary approach on 3 March, noted that the difference with its offer is that Assura shareholders would own roughly 48% of the combined group's shares and that a combination of the two companies "would deliver significant strategic and financial benefits for both sets of shareholders", including forming the eighth largest UK listed REIT with a combined £6 billion portfolio of assets, mostly let to government tenants.
PHP suggested there would be "significant cost and operating synergies", with the combined group expected to have one of the lowest EPRA cost ratios in the sector, with improved access to capital markets and cost of capital benefits due to enhanced scale, liquidity and diversity.
It envisages a "best of both" management approach, with significant experience and expertise across the combined management team and boards.
Assura had not yet responded at the time of publication.
Shres in Assura rose 1.3% and those in PHP 2.4%.
** Update: Adds share price reaction **