Primary Healthcare Properties (PHP) is merging with MedicX Fund to create a £2.3bn (€2.64bn) healthcare infrastructure business.
UK real estate investment trust (REIT) PHP said it is merging with MedicX by acquiring the entire shares of the smaller REIT.
The merger values each MedicX share at 88.7p giving it a market value of £392.9m. The share price represents a 14.3% premium to the last closing price per MedicX share.
PHP currently has a market capitalisation of around £889m and holds £1.4bn worth of investments. The merger with MedicX will create an enlarged company with 479 properties with a combined value of around £2.3bn.
The merger willl see PHP shareholders holding 69.4% and MedicX shareholders owning 30.6% respectively of the newly merged company.
The merger is expected to be approved by MedicX shareholders, as part of a scheme of arrangement. The MedicX directors said they intend to recommend unanimously that its shareholders vote in favour of the deal.
PHP shareholders will also have to approve the merger at a general meeting.
Steven Owen, chairman of PHP, said: “The merger represents a major step forward in PHP’s strategy which significantly extends the scale of our business and asset value.
“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.”
Helen Mahy, chairman of MedicX, said: “Both businesses share a similar focus on high quality, purpose-built primary healthcare assets and have complementary portfolios.”
Mahy said 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. Therefore, the MedicX board unanimously recommends the merger to its shareholders.”