Tweaked Connor ownership soothes regulator's concerns in Acurity takeover
The Commerce Commission has signed off a takeover bid for Acurity Health Group [NZX: ACY] by its three biggest shareholders after tweaks to the holding company ownership structure soothed the competition regulator's concerns the deal would reduce competition in Wellington's private hospital market.
The regulator today cleared Connor Healthcare to buy the shares in Acurity it didn't already own, meaning the takeover has crossed its final hurdle. Connor is made up of Sydney-based Evolution Healthcare, which separately owns Boulcott Hospital in Lower Hutt, and Acurity's other two major shareholders, the Stewart family and the Royston Hospital Trust.
Evolution's ownership of the Boulcott Hospital blocked the earlier application, with the regulator deciding it would put three of the Wellington region's four private hospital under the group's control, which had the likelihood of substantially lessening competition. The Australian firm has agreed it will reduce its stake to 11.7 percent, the same holding it had before takeover.
"The commission is satisfied that subject to the undertaking, the acquisition would not be likely to have the effect of substantially lessening competition in any of the affected markets," chairman Mark Berry said. "We are satisfied that the divestment and the changes to the constitution the parties are making will maintain the status quo while allowing the takeover to proceed."
The offer was altered last month, successfully seeking a two-for-11 fully imputed taxable bonus share issue by Acurity to let shareholders gain access to $2 million in imputation tax credits. The deal meant Connor would cut its price per share to $6.13 from the $7.25 offer, leaving the total consideration paid to investors intact.
Shares of Acurity last traded at $4.976, below the offer price, and have climbed 28 percent this year.