PHP and MedicX to merge in £1.3bn deal

Primary Health Properties is to merge with Medicx, creating a £2.3 billion healthcare giant.

The NHS landlords will combine in an all-share £1.3 billion deal and bring under one umbrella 480 properties, including GP surgeries, pharmacies and dentists.

PHP chairman Steven Owen 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.”

Under the terms of the deal, Medicx shareholders will receive 0.77 new PHP shares for each Medicx share held.

PHP investors will own 69% of the combined firm, with the remainder held by Medicx shareholders.

With PHP shares closing at 115.2p 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 £392.9 million.

PHP expects the merger to result in £4 million per year in cost savings.

Shares in Medicx were 11% higher at 86.6p on Thursday. PHP’s stock was trading 2.7% lower at 112.1p.

On completion of the merger, Medicx chairwoman Helen Mahy will become deputy chairwoman of the 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.

Ms Mahy said: “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.”