19th May 2025 09:19
(Alliance News) - Kohlberg Kravis Roberts & Co LP on Monday defended its offer to buy Assura PLC, claiming its all-cash bid remains the superior option for Assura shareholders, as rival suitor Primary Health Properties PLC attempts to clinch the deal with a part-share offer.
KKR said it "will continue its engagement" with Assura, an Altrincham, England-based care property investor and developer, to complete the terms of its recommended cash acquisition at 49.4 pence per share.
The private equity firm said its proposal offers certainty and immediate liquidity for shareholders, and a more secure path to future growth for the healthcare infrastructure investor.
Assura last month formally recommended KKR's bid, made via its Sana Bidco Ltd vehicle, which is also backed by Stonepeak Partners LP.
But on Friday last week, Assura's fellow FTSE 250 listing, Primary Health Properties, returned with a revised offer: 12.5p in cash plus 0.3769 of a new PHP share for each Assura share.
Based on PHP's share price at the time, the offer implied a total value of 51.7p per Assura share, valuing the company at GBP1.68 billion.
Shares in Assura were down 0.6% at 49.30 pence in London on Monday morning. PHP shares were down 0.9% at 99.54p.
KKR on Monday argued the PHP bid brings "execution risk" and would create a highly leveraged combined entity with limited room for investment and future growth. KKR warned that PHP's plan to deleverage through asset disposals - including hospital properties recently acquired by Assura - could lead to value destruction and earnings dilution.
KKR also flagged potential scrutiny from the UK's Competition & Markets Authority, given the deal would combine the two largest listed healthcare real estate investment trusts in the UK. PHP has not made its offer conditional on CMA clearance, with KKR arguing that the PHP board is "asking the Assura shareholders to bear this risk".
Moreover, KKR criticised PHP's proposed financing, which includes a GBP1.23 billion unsecured loan, arguing it would significantly raise borrowing costs and potentially threaten Assura's investment-grade credit rating. Should the rating fall below investment grade, Assura's GBP900 million in public bonds could be subject to early repayment at less favourable terms.
"Bidco's [KKR's] offer has materially less execution risk, instead of the high uncertainty and time required to deleverage, sell assets and to realise the proposed synergies under the PHP offer," the private equity firm said in a detailed rebuttal on Monday.
KKR also emphasised that its ownership would enable Assura to accelerate its healthcare infrastructure investment across the UK - spanning GP practices, pharmacies, and private hospitals - without the constraints of listed company status or the need to fund growth through asset sales.
The bidding war for Assura continues ahead of a key deadline. Assura previously obtained an extension to Wednesday to post deal documentation for the KKR proposal.
By Eva Castanedo, Alliance News reporter
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