Assura nears acquisition as KKR increases bid to £16 billion pounds

The takeover of Assura, one of the NHS’s largest landlords, appears to have moved a step closer after the American private equity firm KKR, in partnership with Stonepeak, raised its offer to £1.6 billion. The board of Assura, which owns a £3.2 billion portfolio of over 600 healthcare properties, has indicated it is “minded” to accept the bid following extensive consultation with shareholders.

The revised offer, priced at 49.4p per share, represents a modest 2.9 per cent increase on last month’s rejected 48p per share proposal. Despite the incremental rise, this was sufficient to sway Assura’s directors, who had previously refused the offer, citing it as undervaluing the company’s assets.

KKR’s bid comes at a time when Assura shares have experienced significant recovery. Initially rising by 10 per cent since February when KKR’s interest was first announced, Assura’s share price saw another 14.3 per cent jump to 46½p in response to the revised offer on Monday. The valuation matches Assura’s latest net asset value of 49p per share. However, it includes no premium for the cost or effort involved in assembling such a substantial property portfolio.

Assura had entertained an alternative proposition from Primary Health Properties (PHP), another major healthcare landlord, which suggested a potential merger between the two companies. PHP’s proposal, however, projected a share valuation of only 43p, making KKR’s offer more appealing to the Assura board. PHP, while not confirming another bid, stated that a merger presented “compelling strategic and financial rationale.”

Close to 80 per cent of Assura’s income, which totalled £179 million in rents last year, is underpinned by the NHS. The importance of healthcare infrastructure is growing, with increasing demand for new facilities amid population ageing. However, an analyst at Panmure Liberum described KKR’s latest offer as “inadequate,” arguing that it does not compensate shareholders fairly in light of Assura’s long-term growth potential and its strategic significance.

KKR and Stonepeak, as part of their pursuit of Assura, have been granted a limited window for due diligence. If conditions appear satisfactory, Assura’s board has stated it would recommend the 49.4p-per-share offer to its shareholders, marking another significant acquisition of UK real estate by private equity investors in recent months.