June 2022 - Proactive Investors M&A talk28 Jul 2022 18:23
NB: This was when the share price was £13 not £10. Even more of a target now.
Oxford BioMedica PLC (LSE:OXB), Smith & Nephew PLC (LSE:SN) and Spire Healthcare Group Plc (LSE:SPI) are among UK midcap health-care companies "vulnerable” to takeovers from private-equity (PE) firms, investment bank RBC Group says.
The stocks trade below historical multiples and have under-geared balance sheets - making them ripe for "PE firms seemingly well-funded and large trade players having strong balance sheets, and in some cases post-COVID earnings holes to fill," according to the bank.
Trauma and orthopaedic equipment provider Smith & Nephew’s shares are trading “35% below their peak”, the bank said, partly due to the impact of Covid-19 on hospital activity, while its balance sheet is “only modestly geared at 1.6x EBITDA”.
RBC said a consortium of buyers might opt to divest the company's wound care business for a partial return, but with such a hefty price tag, the asset would be likely to come back to the public markets in future.
“A re-IPO could be the potential exit route for PE,” it said.