24th Apr 2023 11:01
(Alliance News) - Medica Group PLC shares surged on Monday, after it said it has reached an agreement with private equity firm IK Investment Partners, on a takeover.
Medica is a Hastings, England-based company that provides services such as x-ray and MRI scan analysis to hospitals. IK Investment Partners is a London-based private equity firm.
Moonlight Bidco Ltd, a wholly owned vehicle of IK Investment, will acquire the telemedicine services provider for 212 pence per share in cash. The deal values all of Medica at GBP269 million.
The price represents a 33% premium to the shares' closing price of 160.0 pence on Friday.
Medica's shares surged 33% to 212.13p each in London on Monday morning. Over the past 12 months, the stock is up 31%, meaning it was flat before Monday's jump. Its year range is 118.25p to 213.00p.
Peel Hunt analysts Miles Dixon and Edward Sham said: "Whilst we appreciate that some investors may want to see a premium greater than 32%, Medica's share price has been range-bound for some time (significantly longer than the style rotation), and we believe this is a good price for a business that, in our view, requires investment in technology in order to maintain its market-leading position."
Medica said that it thinks the terms of the acquisition reflects the strength of its business, team and prospects. The directors said they also think the terms are "fair and reasonable" and encourage shareholders to vote for the takeover at its general meeting.
Chair Roy Davis said: "The board of Medica believes that the offer from bidco represents an attractive and certain value in cash today for Medica shareholders which reflects our reputation as a leading, high-quality teleradiology and wider telemedicine provider with a compelling service offering.
"The board of Medica believes that IK Partners is a strong and credible partner for the business and is well positioned to support its next phase of development, including accelerating investment in the company which will benefit our customers and their patients going forward."
There has been a spurt of dealmaking for London-listed companies in recent weeks, particularly for mid-caps. These include takeover offers for Sureserve Group PLC and Kape Technologies PLC.
Susannah Streeter, head of money and markets at Hargreaves Lansdown. said: "With the swoop on UK targets by overseas buyers continuing unabated, it's fresh evidence that UK assets are considered to be cheap, weighed down by the impact of Brexit, the weaker pound, and the stagnating UK economy.
"We could even see an upswing of activity as the year progresses. Even though another rate hike is expected from the Bank of England in May, with inflation to fall back more sharply in the second half of the year, there is an end in sight to higher borrowing costs, which could propel more deals."
By Heather Rydings, Alliance News senior economics reporter
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