LONDON (Alliance News) - Primary Health Properties PLC said Thursday it will merge with Medicx Fund Ltd to create a healthcare property firm with almost 480 properties worth a combined GBP2.3 billion.
The all-share merger will see Medicx shareholders received 0.77 new PHP shares for each Medicx share held. This will see PHP shareholders own 69% of the combined firm, with the remainder held by Medicx investors.
With PHP shares closing at 115.2 pence on Wednesday, the deal values each Medicx share at 88.7p each - a 14% premium to its closing share price and an 8.5% premium to its last net asset value. In total, this values Medicx at GBP392.9 million.
Shares in Medicx were 10% higher at 85.41p each on Thursday. Meanwhile, PHP were 3.7% lower at 110.92p with a market capitalisation of GBP857 million.
PHP expects the merger to result in the GBP4.0 million per year cost saving by the end of the first full year. This is equivalent to 0.4p per share.
"The merger represents a major step forward in PHP's strategy which significantly extends the scale of our business and asset value," PHP Chair Steven Owen said. "The highly complementary nature of the two portfolios will allow the combined business to continue to maximise shareholder value through delivering synergies across the businesses and accelerate the enlarged group's role in the modernisation of the primary care estate in the UK and Ireland."
On completion of the merger, Medicx Chair Helen Mahy will become deputy chair of the combined firm. Medicx Non-Executive Director Laure Duhot will also take up the same role at the new combined firm.
Current PHP Non-Executives Nick Wiles and Geraldine Kennell will stand down in order to keep board numbers appropriate and balance PHP and Medicx executives.
Mahy added: "Both businesses share a similar focus on high quality, purpose-built primary healthcare assets and have complementary portfolios. The strategic fit of the two businesses is excellent and shareholders in the enlarged group will have the opportunity to participate in further growth and share in the significant benefits of scale and operational efficiencies."
"Financially, the merger offers MedicX shareholders a premium to NAV as well as attractive accretion to earnings and dividends per share," Mahy added. "Therefore, the MedicX board unanimously recommends the merger to its shareholders."