MARKET REPORT: Top shareholders shun £1.4bn bid for Spire Healthcare

Spire Healthcare tumbled after shareholders shot down a £1.4billion takeover offer that would have turned it into the UK’s largest private hospital group.

Spire’s Australian rival Ramsay Health Care had tabled a 250p-per-share bid for the mid-cap hospital group, which had been accepted by the board.

It needed to win 75 per cent of votes at a one-off meeting for the deal to go through. But it only clinched 70 per cent after two of Spire’s biggest shareholders – Fidelity and Toscafund – rebelled against Ramsay and tried to convince others to do the same.

Ramsay had been trying to woo Spire’s investors since May, when it put forward a 240p offer that was also backed by management.

It hiked it to 250p earlier this month – but Fidelity and Toscafund continued to say it hugely undervalued the company, which they believe is set to outperform over the next few years.

It is uncommon for a takeover deal that has been accepted by a company’s board to be torpedoed by shareholders. Spire has 39 hospitals and eight clinics in Britain where it treats private and NHS patients. 

The company is chaired by Sir Ian Cheshire, chairman of Barclays UK, who said the board respected the decision and that the firm is ‘well positioned for success as a standalone business’.

Cheshire added: ‘Throughout our ongoing engagement with shareholders, feedback has been overwhelmingly positive towards the long-term strategy and our strong management team.’

Alex Wright, portfolio manager at Fidelity Special Solutions Fund, said Spire is in a good position to do well when Covid passes.

‘We remain confident and supportive of Spire’s strategic plans,’ he said. ‘In our opinion, Spire can return to a 2015-to-2017 level of earnings over the next three to five years.’ Despite Ramsay’s efforts, many believed the takeover was in trouble when on Friday Spire’s shares closed at 235p – significantly below the offer price.

Its stock dived another 7.2 per cent, or 17p, to 218p last night.

The wider market was also in the red after a torrid day for stocks around the world, as concerns continued to rise about the spread of the Delta variant.

In the UK, the FTSE 100 dropped 2.3 per cent, or 163.7 points, to 6844.39 and the FTSE 250 also by 2.3 per cent, or 526.12 points, to 21,940.88 as England’s ‘Freedom Day’ was marred by soaring infection rates and mixed messages from the Government, which urged people to remain cautious while it also went ahead and lifted Covid restrictions.

Aside from airlines and travel stocks, oil shares also lost ground after Opec agreed a deal to increase supply from August.

The oil price fell and BP was off 4.7 per cent, or 13.8p, at 278.45p while Shell lost 4.2 per cent, or 57.4p, at 1311p.

Another notable loser was Ocado after the online delivery company suffered its second fire in just two years. The fire was caused by a robot collision at its warehouse in Erith in south-east London.

One broker said: ‘The worries aren’t about Ocado itself, but what if a fire broke out at a customer warehouse like Kroger. There’ll be some eyebrows raised about what effect this has on future deals.’

Shares fell 1.9 per cent, or 34p, at 1771p.

Further down the market and Litigation Capital Management said its second fund will close by the end of the summer after strong interest from investors.

The £219million fund is a big vote of confidence for the company which competes with Burford Capital (down 4 per cent, or 30p, at 722.5p).

Litigation finance has grown rapidly as an asset class in recent years with investors hunting for higher returns on their money.

But shares were down 5.2 per cent, or 6p, at 109p.

Make-up group Revolution Beauty had a disappointing debut on AIM. The Camden-based company went public at 160p, but closed at 150p.