Clearance for Connor to acquire shares in Acurity

Commerce Commission gives clearance for Connor to acquire shares in Acurity subject to Evolution selling down its shareholding after the takeover

Media Release

Issued 19 December 2014

Release No. 65

The Commission has given clearance to Connor Healthcare Limited to acquire all of the shares in Acurity Health Group Limited that Connor does not already own, subject to Evolution Healthcare (NZ) Pty Ltd divesting shares in Connor after the takeover. The effect of that divestment is that Evolution’s interest in Acurity will remain at the same level as it was prior to the acquisition, maintaining the status quo while allowing the takeover of Acurity to proceed.

Acurity is the owner of Wakefield and Bowen hospitals in Wellington and Royston Hospital in Hawke’s Bay. Evolution owns Boulcott Hospital in Lower Hutt. Evolution also owns Connor, which in turn owns 11.7% of the shares in Acurity. The takeover will result in Connor holding all of the shares in Acurity, and Evolution holding 25% of the shares in Connor with the remaining 75% being held by Austron Limited.

However, Connor and Evolution have given the Commission an undertaking that within one month of the takeover being complete, Evolution will reduce its shareholding so that it will effectively return to its pre-acquisition level of an 11.7% interest in the company that owns Wakefield and Bowen hospitals, which will then be Connor. The parties will also make changes to Connor’s constitution.

“The Commission is satisfied that subject to the undertaking, the acquisition will not have or would not be likely to have the effect of substantially lessening competition in any of the affected markets,” Commission Chairman Dr Mark Berry said.

“Evolution’s undertaking to divest some of its interest in Acurity will return its shareholding in Acurity to its pre-takeover shareholding of 11.7%. We are satisfied that the divestment and the changes to the constitution the parties are making will maintain the status quo while allowing the takeover to proceed,” said Dr Berry.

In its application, Connor provided details of an option for Evolution to acquire more of an interest in the Acurity hospitals in future. Any further acquisition would be conditional upon clearance being given to that particular transaction.

Background

The present application for clearance is for the same acquisition that the Commission declined to give clearance for on 11 December 2014. However, the present application included an undertaking that Evolution, the owner of Connor will dispose of certain assets and shares.

Where a merger raises competition concerns, a person applying for clearance can provide an undertaking to sell certain assets or shares as a condition of clearance in order to remedy any competition concerns.

If a person does not comply with their divestment undertaking, the clearance to which the undertaking relates is void from the date it is granted. This means that the merger can be challenged in the High Court by the Commission or a third party on the grounds that the merger has the effect or likely effect of substantially lessening competition.

© Scoop Media