Spire Healthcare Group Plc's (LSE:SPI) confirmation that it is in preliminary talks with Bridgepoint and Triton has sharpened focus on the company’s valuation as speculation builds around a potential bid.
Analysts at Panmure Liberum and Peel Hunt both welcomed the update, seeing the named suitors as credible and the discussions as evidence of genuine interest.
“The news that the strategic review has led to at least two ongoing discussions increases the chances that a deal might be done, in our view,” said Seb Jantet at Panmure Liberum.
Jantet sees 250p per share as a minimum acceptable offer and suggests that any proposal above 300p would reflect fair value.
He added that the key will be whether Spire’s advisors can create sufficient competitive tension to drive up the price, which jumnped 20% to 214p on Monday.
Peel Hunt’s Miles Dixon also highlighted a disconnect between Spire’s current share price, which closed last week around 177p, and the value of its operations and real estate.
The current level, giving a £714 million market cap, "materially undervalues" the operating business and the freehold real estate of around £1.4 billion, he argued.
He noted that in early December, Spire had said trading momentum has been positive since July's results, with revenue growth of 3.6%, but a temporary slowdown in NHS commissioning activity due to Integrated Care Board budgetary restrictions led Spire to revisit its FY26 guidance.
The company said it expected full-year adjusted group EBITDA for FY25 to be around the bottom end of the guidance range of £270-285 million.
"This development was/is very frustrating from the current Government/NHS administrators (eg the proposed annual tariff uplift fell significantly short of the prevailing rate of inflation too) given that the NHS has a serious waiting list problem; that the Government has earmarked additional funding to clear the backlog and indicated its intention to make use of private providers to help clear the waiting list; and that it has willing partners (such as SPI) to help us tackle the problem.
"However, this ‘confused thinking’ is not incompatible with some of other political ‘own goals’ we have seen lately, in our view. We, like the company, remain confident in the medium-term outlook for private healthcare providers in the UK and are confident that the commissioning should return to normal once the impact of these short-term decisions is felt."