Australian healthcare firm Symbion Health Ltd will be broken up and sold to Healthscope Ltd and private equity firms in a A$2.8 billion ($2.5 billion) deal aimed at sidestepping opposition to a tie-up from a rival suitor.
The revised plan to create Australia's top pathology provider comes after Primary Health Care Ltd, which has a 20 percent stake in Symbion, used its voting power to scupper Healthscope's original A$2.9 billion takeover bid last month.
Symbion said Primary was still interested in buying some of its businesses and had written to the company offering to buy selected assets, but analysts said Healthscope appeared to be in pole position as the new deal had a lower threshold for shareholder acceptance.
In this form it looks like it will probably win acceptance. I think a lot of Symbion shareholders shareholders want a resolution to this, said Shaw Stockbroking analyst Brent Mitchell.
It's not that different from the original proposal, although it will take longer and just involves a couple of extra steps.
Under the new proposal, Healthscope would buy Symbion's pathology, diagnostic imaging and medical centres business in a scrip deal, valuing it at A$2.52 billion to A$2.65 billion, including debt.
In a separate transaction, private equity firms Archer Capital and Ironbridge Capital, which partnered Healthscope in its original bid, would buy the rest of Symbion -- comprising its consumer and pharmacy assets -- for around A$1.15 billion in cash.
Symbion, the medical testing, radiology and pharmacy group that remained after Mayne Group spun off its drugs arm in 2005, said the new proposal valued it at A$2.8 billion, or A$4.30 a share, based on Healthscope's closing price of A$5.75 a share.
This was about 2 percent below the original proposal, due to additional costs and charges for the revised proposal.
Shares in Symbion and Healthscope were placed on a trading halt on Monday. Symbion closed on Friday at A$4.20 a share. Primary closed steady on Monday at A$12.10 a share.
APPROVAL THRESHOLD LOWERED
The new plan lowers the level of shareholder acceptance needed to approve the first stage of the deal from 75 percent to 50 percent, making it more difficult for Primary to overturn.
The initial proposal was supported by the majority of shareholders, but received only 73.9 percent of votes due to Primary's opposition.
Symbion, which runs a network of more than 80 medical testing laboratories across Australia, has long been seen as a target for consolidation in an industry buoyed by an ageing population and growing private health insurance membership.
Once Symbion's gone the opportunities to take these sort of quantum leaps disappear, noted Mitchell.
Under Australian corporate law, Primary's 20 percent Symbion stake, worth around A$543 million based on Symbion's closing share price on Friday, is the most it can hold without having to mount a takeover offer.
Uncertainty has surrounded the intentions of Primary, which has previously proposed buying some Symbion assets.
Symbion said Primary's letter on Monday expressed interest in acquiring its medical centres business and selective parts of its pathology and radiology businesses.
The letter did not include details of a proposed price, but referred to a net bundle price equal to or better than the implied EBITDA (earnings before interest, tax, depreciation and amortisation) multiples of the original Healthscope/Symbion deal, Symbion said.
Symbion said it would consider Primary's proposal, which it said appeared similar to a proposal Primary made to Healthscope in September that was rejected.