Major UK private hospital firm Spire taken over by hedge fund in £1 billion deal

Private hospital operator Spire Healthcare has accepted a £1 billion takeover bid from a consortium of investment firms.

The acquisition is being made through Tulip UK, a newly created vehicle backed by funds advised or managed by Toscafund Asset Management, THCP Advisory, and Ares Management.

Spire, which is listed in London, had engaged in discussions regarding a potential sale for several months with Toscafund, its second-biggest investor.

Under the terms of the agreement, shareholders will receive 250p per share.

This proposal reflects a premium of approximately 66 per cent compared to Spire’s closing price on 13 May, the final trading day before negotiations were made public.

Overall, the deal values the group’s entire share capital at roughly £1.03 billion on a fully diluted basis.

open image in gallery

Spire is a healthcare group operating 38 hospitals and around 55 clinics in England, Wales and Scotland.

It also runs a network of private GPs and provides workplace health services to more than 1,400 employers.

The company has been undergoing a strategic review since last September, and the buyers said they plan to launch a further year-long review after the acquisition which may lead to changes to its primary care businesses.

This could lead to a reduction in the number of people employed by Spire through its private GP network, should they decide to divest parts of the business, according to Tulip UK’s offer.

Spire said the offer comes against a backdrop of cost pressures, particularly inflation, and subdued investor sentiment in the UK public markets.

Bosses believe that being taken off the London stock market and into private ownership would give greater access to investment and capital for growth opportunities, including potential mergers and acquisitions.

open image in gallery

Alongside the announcement of the deal, the companies said it had been agreed that Spire’s chief executive Justin Ash will step down and be replaced, on an temporary basis, by Sir David Sloman.

Debbie White, Spire’s chair-designate, said: “The long-term prospects for independent healthcare in the UK are strong, but the trajectory has demonstrated much volatility in recent years and the ongoing cost pressures have been material, including from increases in national insurance contributions and the national minimum wage.

“Having conducted a comprehensive strategic review, the board is satisfied that the Acquisition represents the best available outcome for Spire shareholders.”

Martin Hughes, Toscafund’s chief executive, said: “As a private company, Spire would have the freedom to plan for the long term and the agility to move faster: investing in its hospitals and people, putting the latest technology to work and setting new standards in patient care.”

Spire’s shares were up by about 3 per cent on Monday morning following the announcement.