Market report: 'Time right' for Mediclinic to swoop for rest of Spire

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Brexit-fuelled deal chatter was in full flow today as traders pondered a possible takeover of UK private hospitals group Spire by its largest shareholder Mediclinic.

The South African private healthcare group, which bought a near-30% stake in Spire last year, is rumoured to be interested in snapping up the rest of the FTSE 250 company.

Shares in FTSE 100 group Mediclinic, which joined the LSE earlier this year after its takeover of Abu Dhabi-based Al Noor Hospitals, have soared 16% since the EU Referendum in June thanks to the drop in the value of the pound.

Spire, on the other hand, is marginally in the red since the end of June, and JPMorgan Cazenove thinks that makes it a good time for Mediclinic to swoop, even after a recent rally.

Analyst Alex Comer expects Mediclinic, which is majority-owned by Remgro, the vehicle of the billionaire Rupert family, to pay a 35% premium for Spire and says it could fund the deal through debt.

However, the analyst speculated that Mediclinic could also choose to raise up to £500 million through issuing new equity “in order to leave less gearing and also fund Spire’s London hospital expansion”.

Fearing a potentially dilutive placing, investors sent Mediclinic down 5p to 1081p while Spire, which reports first-half results on Thursday, edged up 0.6p to 344.6p.

The FTSE 100 index returned to winning ways today, climbing 30.78 points to 6859.32 with housebuilding, mining, and banking stocks among the best performers.

Hong Kong property mogul Samuel Tak Lee, owner of the historic Langham Estate between Soho and Mayfair, increased his stake in West End property firm Shaftesbury to above 8%, lifting the shares 7p to 962.5p.

On the mid-cap index, industrial services firm Cape was off 5.85p to 182.4p as first-half results showed lower margins in the UK.

Away from the main market, Sirius Minerals, whose biggest shareholder is Theresa May’s husband Philip’s Capital Research, hit new highs. The company, which is to mine potash for fertiliser from beneath the North York Moors National Park, is now worth £1.15 billion despite having yet to generate revenue. Shares rose 4.48p to 49.98p.

A £3.4 million deal to buy Asda’s in-store photo business lifted passport snaps specialist Photo-Me by 1.25p to 163.75p. AIM punters filled their boots with shares of Jersey Oil & Gas, up 5p at 35.5p, which managed to find a  funding partner in Statoil for two North Sea blocks.

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August 23, 2016 |
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