• Buyout firm offers 48p per share
• Fourth attempt to reach a deal
• Analyst calls premium ‘fair’

Investors in healthcare facilities provider Assura (AGR) will have received the news of an approach from buyout giant KKR (KKR:NYSE) with mixed feelings given the FTSE 250 firm is an income stalwart with an attractive yield.

The shares immediately jumped 7p or 18% to 46p, just short of KKR’s 48p per share offer made last week.

STANDING FIRM

Assura, which owns a £3 billion portfolio of purpose-built community health buildings, confirmed after the market close on Friday it had received an unsolicited approach from KKR and USS Investment Management, acting on behalf of the Universities Superannuation Scheme, and was reviewing the proposal with its advisors.

The firm also said it remained confident in its long-term prospects and was ‘strongly positioned to create value for shareholders’.

KKR said its latest offer, which represented a 28% premium to the closing price on 13 February, followed ‘significant work over the last six months which resulted in three previous written proposals made to the board of Assura’, each of which was rejected unanimously.

The New York-based buyout firm also called its latest offer ‘a highly attractive opportunity for Assura shareholders to realise their investment in cash at a significant premium to prevailing market prices’.

However, having been turned down four times the firm said it was ‘considering whether there is any merit in continuing to try and engage with the board’ and there was no certainty it would make a firm offer.

ATTRACTIVE ASSETS

Shore Capital’s Andrew Saunders commented that despite the lacklustre performance of the shares over the last year and the 23% discount to his 51p estimate of net tangible assets, Assura is ‘well-managed, has a high-quality portfolio and many attributes of obvious attraction to the combined bidder’.

With primary care and health facilities typically enjoying long leases of up to 25 years and a growing rent roll, just over half of which is subject to open market reviews while a third is inflation-linked, Assura offers an appealing income story and the current 8.7% dividend yield is also ‘highly attractive to a potential bidder,’ said Saunders.

The 48p per share cash offer ‘looks fair’ according to the analyst and the next step is to hear from Assura how it intends to deliver on its promise to create more value for shareholders.

Disclaimer: The author owns shares in Assura.

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