Spire Healthcare PLC (LON:SPI) said it recommended a proposed £999mln cash offer put forward by Ramsay Health Care Ltd (ASX:RHC).
Shareholders will receive 240p, which represents a 24.4% premium to Tuesday’s closing price.
The FTSE 250 group said the acquisition will boost its strategy growth, while Ramsay said the combination builds a broader platform to take advantage of the opportunity for sustained growth in the £5.8bn UK private hospital sector.
Ramsay's UK network spans 22 private UK hospitals, nine treatment centres and three neurological units,
“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 chief executive and managing director Craig McNally.
“Spire's track record of serving self-pay and insured patients will increase patient choice at Ramsay. 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.”
Mediclinic PLC (LON:MDC), which holds a 29.9% interest in Spire, said it has provided an irrevocable undertaking to vote in favour of the offer. The FTSE 250 private hospital peer will receive £287.8mln from the sale, which would provide “additional financial flexibility to deliver Mediclinic's strategic goals including the pursuit of further growth opportunities”.
"We do not think counter bids are likely as the price is too rich for PE [private equity] and there are no obvious strategic bidders. Hence we think this is a good bid and should be acceptable to shareholders," analysts at Liberum commented.
"But, there will be competition authority issues and getting the deal over the line will not be straight-forward. We would recommend investors lock-in gains if the shares close in on the bid price."
Shares in Spire soared 25% to 240.44p, while Mediclinic jumped 8% to 334.4p on Wednesday morning.