Spire rejects 1.2 billion pound Mediclinic offer, shares soar

By Justin George Varghese

(Reuters) - Britain's Spire Healthcare <SPI.L> has rejected a full takeover offer from South African private hospitals operator Mediclinic International <MDCM.L>, which already owns nearly 30 percent of its stock, sending its shares up 12 percent.

Spire said Mediclinic had made a preliminary and conditional proposal that consisted of 150 pence in cash and 0.232 new Mediclinic shares per Spire share, valuing the target at 298.6 pence per share or around 1.2 billion pounds ($1.6 billion) in total.

Spire shares were up 13.1 percent at 295.6 pence by 0807 GMT, on track for their biggest-ever daily gain and only a slight discount to the value of Mediclinic's terms.

Spire, whose statement on Monday confirmed what a person familiar with the matter told Reuters on Sunday, said it had reviewed the proposal and decided that it significantly undervalued the company and its prospects.

It strongly advised shareholders to take no action in relation to the proposal.

Mediclinic said it was considering its position and made no further comment on its likely response to Shire's rejection. It has until 5 p.m. on Nov. 20 to either make a firm offer for Spire, whose 39 private hospitals make it Britain's second-largest healthcare company, or walk away for the time being.

South African private healthcare providers, which also include Life Healthcare <LHCJ.J> and Netcare <NTCJ.J>, have been in a race to expand by making acquisitions in more developed markets as an anti-trust inquiry has constrained growth at home.

Mediclinic bought its Spire stake for about 430 million pounds ($567 million) from private equity firm Cinven in 2015. Some analysts were cautious about how well placed it was to pursue the Spire deal, especially given its acquisition last year of United Arab Emirates-based Al Noor.

"MDC is still turning around the Al Noor asset it acquired in the UAE, and we are unsure of MDC’s shareholders’ appetite for another large transaction so soon," said James Vane-Tempest, an analyst at Jefferies.

Spire, formed from the sale of Bupa Hospitals to Cinven in 2007, made its stock market debut in 2014. Monday's rise carried the shares to their highest since before Sept. 14, when a 75 percent slump in first-half profit and lower than anticipated revenues in July and August sent the stock down as much as 25 percent.

($1 = 0.7569 pounds)

(Reporting by Justin George Varghese in Bengaluru; Editing by Jason Neely and David Holmes)