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Major Acurity shareholders launch all-cash takeover bid

Major Acurity shareholders launch all-cash takeover bid

By Paul McBeth

July 28 (BusinessDesk) - The three biggest shareholders of Acurity Health Group have launched a cash takeover bid for the 29 percent they don't own, valuing the private hospital operator at $112.2 million, saying the firm faces a big struggle lifting its flagship Wellington hospital up to earthquake code.

Connor Healthcare, an entity set up by principal shareholders the Stewart family, Royston Hospital Trust Board, and Evolution Healthcare, are offering $6.50 a share for the rest of Acurity, a 24 percent premium to the last trading price of $5.25, the company said in a statement. Connor cites a Forsyth Barr report estimating capital expenditure needs of $50 million to upgrade the Wakefield hospital in Wellington and illiquidity of the shares as driving the need for the group to be privatised.

"Acurity faces formidable challenges including considerable capital expenditure estimated at approximately $50 million to meet the earthquake code requirements at its flagship hospital in Wellington," Connor spokesman Mark Stewart said. "This capital expenditure represents between $2 and $3 per share purely to maintain the existing capacity at the hospital."

Sydney-based Evolution bought an 11 percent stake in Acurity last year, paying $5.50 a share, and also owns Boulcott hospital in Hutt City. The Stewart family and Royston launched a successful partial takeover in 2012 at $6 a share.

The takeover offer is expected to be sent to shareholders on Aug. 26, and will need minimum acceptances of 90 percent to allow Connor to exert the mop-up provisions. The deal will also be subject to approval from the Overseas Investment Office.

The shares were unchanged at $5.25 on Friday, and have decreased 3.5 percent this year. The company has net tangible assets per share of $5.368, according to NZX data.

In May, Acurity beat guidance as it boosted annual profit 55 percent, and said it anticipated growth in public sector funding due to capacity constraints for elective surgery in state-run hospitals.


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