Ramsay Health Care to snap up Spire

BY Richard Summerfield

Independent hospital group Spire Healthcare Group is to be acquired by Australian hospital operator Ramsay Health in a deal worth $1.42bn.

Under the terms of the deal, Spire shareholders will receive 240p per share, which represents a 24.4 percent premium to Tuesday’s closing price, the day before the deal was announced. The deal will be funded through Ramsay’s existing debt facilities and the company expects to retain its 2021 dividend payout ratio in line with historical levels.

Spire operates 39 hospitals and eight clinics in the UK and posted an adjusted pre-tax loss of $326.80m in 2020, largely due to the COVID-19 pandemic. The company, which treated around 750,000 patients last year, has major contracts with the UK’s NHS network, and was dramatically impacted by the decline in routine patient visits to hospitals during the pandemic. The company expects profit to return to pre-pandemic levels this year.

According to Ramsay, the combination with Spire builds a broader platform to take advantage of the opportunity for sustained growth in the £5.8bn UK private hospital sector.

“Ramsay will work closely with the Department of Health & Social Care to ensure all shared objectives are closely aligned and we stand ready to support the NHS in tackling the significant increase in waiting lists and the return of elective procedures in the UK,” said Craig McNally, chief executive and managing director of Ramsay.

“Spire’s track record of serving self-pay and insured patients will increase patient choice at Ramsay,” he continued. “It will enhance our capacity to work closely with our consultant partners and clinicians to ensure further investment in clinical excellence in all our specialties through the provision of multi-disciplinary care to better service both self-pay and insured patients.”

“The acquisition of Spire will transform our UK business from a financial perspective, with the combination of Spire with Ramsay’s UK business delivering a powerful foundation for further growth by diversifying our payer sources and case mix through Spire’s expertise in acute care and significant exposure to the self-pay and insured patient market,” said Andy Jones, UK chief executive of Ramsay.

Ramsey said it would engage with the UK Competition and Markets Authority (CMA), which may require it to divest certain hospitals and clinics for the deal to go through.

Mediclinic PLC, which holds a 29.9 percent interest in Spire, has indicated it will vote in favour of the offer. The company will receive £287.8m from the sale, which would provide “additional financial flexibility to deliver Mediclinic’s strategic goals including the pursuit of further growth opportunities”.

News: Australia’s Ramsay Health Care to buy UK’s Spire for $1.4 billion

Canadian National and Kansas City Southern to combine in $33.6bn deal

BY Fraser Tennant

In a merger intended to create a premier railway for the 21st century, railway company Canadian National and transportation holding company Kansas City Southern are to combine in a deal valued at $33.6bn.

Under the terms of the definitive agreement, Kansas City Southern shareholders will receive $200 in cash and 1.129 shares of Canadian National common stock for each Kansas City Southern common share, with Kansas City Southern shareholders expected to own 12.6 percent of the combined company.

The combination will further accelerate Canadian National’s industry-leading growth profile by connecting North America’s industrial corridor to create new options for shippers. The combined company will substantially help realise the many benefits of the United States-Mexico-Canada Agreement (USMCA), bringing it to life in a meaningful way.

Although Canadian National's offer to buy Kansas City Southern upended a $29bn deal with its competitor Canadian Pacific, the rival bidder has stated that it is willing to re-engage with Kansas City Southern should the deal run into regulatory difficulties with the US Surface Transportation Board (STB), the regulator that oversees railroad companies.

“We are thrilled that Kansas City Southern has agreed to combine with Canadian National to create the premier railway for the 21st century,” said Jean-Jacques Ruest, president and chief executive of Canadian National. “I would like to thank the numerous stakeholders of both companies who have demonstrated overwhelming support for this compelling combination, and we look forward to delivering the many benefits of this pro-competitive transaction to them.”

The transaction has been unanimously approved by the board of directors of each company.

“As North America’s most customer-focused transportation provider, we are excited about this combination, which will provide customers access to new single-line transportation services at the best value for their transportation dollar and increase competition,” said Patrick J. Ottensmeyer, president and chief executive of Kansas City Southern. “Our companies’ cultures are strongly aligned, and we share a commitment to environmental stewardship, safe operations, reliable service and outstanding performance.”

Both companies are confident that they will obtain all necessary regulatory approvals, including from the STB, as well as the Federal Economic Competition Commission and Federal Telecommunications Institute in Mexico.

Robert Pace, chair of the board of Canadian National, concluded: “We are confident in our ability to gain the necessary regulatory approvals and complete the combination with Kansas City Southern, and we look forward to combining to create new opportunities, more choice and a stronger company.”

News: Kansas City Southern sticks to Canadian National after Canadian Pacific fails to raise bid

AT&T and Discovery combine media brands in $43bn deal

BY Fraser Tennant

In a deal that creates one of the largest global streaming players, US telecoms giant AT&T is to combine its WarnerMedia premium entertainment, sports and news assets with streaming service Discovery's nonfiction and international entertainment and sports businesses.  

Under the terms of the definitive agreement, which is structured as an all-stock, Reverse Morris Trust transaction, AT&T will receive $43bn in a combination of cash, debt securities and WarnerMedia’s retention of certain debt. AT&T’s shareholders will receive stock representing 71 percent of the new company, while Discovery shareholders will own 29 percent.  

Once the transaction is complete, the new company will compete globally in the fast-growing direct-to-consumer business, bringing compelling content to direct-to-consumer subscribers across its portfolio, including HBO Max and the recently launched discovery+.

In addition, the transaction will combine WarnerMedia’s storied content library of popular and valuable intellectual property with Discovery’s global footprint, trove of local-language content and deep regional expertise across more than 200 countries and territories.

“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” said John Stankey, chief executive of AT&T. “It will support fantastic growth and create efficiencies which can be re-invested in producing great content to give consumers what they want.”

Moreover, Discovery president and chief executive David Zaslav will lead the proposed new company, with a management team and operational and creative leadership drawn from both companies.

“It is exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity,” said Mr Zaslav. “We will build a new chapter together with the creative and talented WarnerMedia team and these incredible assets built on a nearly 100-year legacy of the most wonderful storytelling in the world.”

The boards of directors of both AT&T and Discovery have approved the transaction, which is anticipated to close in mid-2022, subject to approval by Discovery shareholders and customary closing conditions, including receipt of regulatory approvals.

Mr Stankey concluded: “This is an opportunity to unlock value and be one of the best capitalised broadband companies – a global media leader that can build one of the top streaming platforms in the world.”

News: AT&T set to end media voyage with $43 bln Discovery deal

Crown turns down Blackstone bid

BY Richard Summerfield

Private equity giant Blackstone has had a $6.5bn offer for troubled Australian casino operator Crown Resorts rejected.

“The board has unanimously concluded that the revised (Blackstone) proposal undervalues Crown, and is not in the best interests of Crown’s shareholders,” Crown said in a statement.

The company noted that Blackstone’s offer of A$12.35 per share, or A$8.4bn, did not consider the full value of its assets, a potential jump in earnings once the COVID-19 pandemic eases and plans to pay down a significant amount of debt. The Blackstone offer also created some uncertainty about the timing of any deal, Crown noted.

Star Entertainment Group, which owns and operates casinos and hotels across Australia, most notably in New South Wales and Queensland, has also made an all-stock offer for Crown. In a separate statement, Crown said it had not yet formed a view on the merits of the Star merger proposal but had requested certain information to better understand preliminary matters. The Star proposal is expected to attract antitrust scrutiny, which could create difficulties going forward.

Crown has endured a considerable adversity of late. In addition to a slump in profits due to the coronavirus pandemic, the company has also faced increased regulatory scrutiny, lost its licence to operate a flagship new casino on Sydney’s waterfront amid allegations of money laundering and links to organised crime, and also faces inquiries in the other two Australian states where it is licensed to operate. Furthermore, the company is facing two civil lawsuits accusing it of failing to disclose risks which led to share price declines.

Blackstone initially offered $11.85 a share for Crown, representing a 19 percent premium to the volume-weighted average price of Crown shares since the release of its first half results for the financial year 2021. Blackstone, which owns around 10 percent of Crown shares, increased its previous offer in April. The modified deal included conditions designed to safeguard Blackstone against an adverse recommendation like the cancellation or suspension of Crown’s Western Australia or Victorian licences by either inquiry before the deal is approved by courts.

Rival private equity firm Oaktree Capital Group has also expressed an interest in Crown, offering a “structured instrument” to help Crown buy back the 37 percent stake held in the company by founder James Packer.

News: Crown Resorts rejects Blackstone’s proposal and keeps Star under review

Firms unprepared for cyber attacks, says CISO report

BY Richard Summerfield

Two-thirds of chief information security officers (CISOs) feel their companies are unprepared for a cyber attack, according to a new report from Proofpoint Inc.

The company’s inaugural ‘2021 Voice of the CISO Report’ examines global third-party survey responses from more than 1400 CISOs at mid to large size organisations across different industries. Throughout the course of Q1 2021, 100 CISOs were interviewed in each market across 14 countries: the US, Canada, the UK, France, Germany, Italy, Spain, Sweden, the Netherlands, UAE, Saudi Arabia, Australia, Japan and Singapore.

According to the report, 66 percent of CISOs feel their organisation is unprepared to handle a cyber attack and 58 percent consider human error to be their biggest cyber vulnerability. These responses are particularly noteworthy given the mass migration of employees to remote working over an unprecedented 12 months. Many CISOs have struggled to create a sense of urgency and priority among employees. Security training and awareness remain a challenge. Accordingly, 66 percent percent of CISOs do not believe their organisations are prepared to cope with an attack.

“Last year, cybersecurity teams around the world were challenged to enhance their security posture in this new and changing landscape, literally overnight,” said Lucia Milică, global resident CISO at Proofpoint. “This required a balancing act between supporting remote work and avoiding business interruption, while securing those environments.”

She continued: “With the future of work becoming increasingly flexible, this challenge now extends into next year and beyond. In addition to securing many more points of attack and educating users on long-term remote and hybrid work, CISOs must instill confidence among customers, internal stakeholders, and the market that such setups are workable indefinitely.”

However, despite many of the concerns voiced by CISOs regarding preparedness, many CISOs do feel adequately prioritised from a budget standpoint. The majority of global CISOs expect budgets to increase by at least 11 percent in the next two years. Sixty-five percent believe their companies will be better able to resist and recover from cyber attacks by 2022/23.

Report: 2021 Voice of the CISO report