Looks like a conclusion to this drawn out process might be near....

Looks like a conclusion to this drawn out process might be near. Time for PRY to show its bid, or walk away.

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Healthcare companies Healthscope Ltd and Symbion Health Ltd have announced a revised proposal they say will have a similar outcome to a proposed $2.86 billion merger proposal that was narrowly voted down by Symbion shareholders last month.

Under the revised proposal, Healthscope will acquire the pathology, diagnostic imaging and medical centres businesses of Symbion (the diagnostics businesses).

Private equity firms Ironbridge Capital and Archer Capital (the IAC consortium) would acquire Symbion's pharmacy services and consumer businesses via a scheme of arrangement.

Symbion shareholders will get $2.516 billion to $2.646 million for the diagnostics businesses via the issue of Healthscope shares and the assumption of debt by Healthscope.

The offer price to Symbion shareholders has an implied value of $4.23 to $4.43 per share (excluding Symbion's final dividend for 2006/07 of five cents).

Based on a Healthscope share price of $5.76, the implied value of the proposal is $4.30 per Symbion share.

"The Symbion Health directors unanimously recommend the revised proposal in the absence of a superior proposal," Symbion said.

The recommendation is subject to the receipt of an independent expert's confirming that the diagnostics sale plan is in the best interests of, or fair and reasonable for, Symbion shareholders.

Meanwhile, Primary Health Care Ltd, which holds a substantial stake in Symbion, had written to Symbion on Monday.

The letter was not recieved until after Symbion, Healthscope and the IAC consortium had executed binding agreements to implement the revised proposal.

Symbion said Primary had expressed an interest in acquiring its medical centres business and some parts of its pathology and radiology business.

"The letter from Primary did not include details of a proposed price for these selective assets," Symbion said.

"The letter did not contain details of the proposed conditions, transaction structure or funding.

"The letter indicates that Primary would require due diligence but the letter does not set out any details of Primary's expectations in this regard."

Symbion said it appears that Primary's proposal is similar to one it made on September 6, which was rejected by Healthscope.

Symbion said the revised proposal is only approximately nine cents per share less than Healthscope's original proposal to buy the company.

"The reduction in value is due to additional costs and charges associated with the revised proposal," it said.

But Symbion can still consider competing proposals.

"Symbion Health can consider competing proposals for the Diagnostics Business, the Consumer and Pharmacy Businesses, and Symbion Health as a whole, until the day of the relevant shareholder meetings," it said.

Symbion chairman Paul McClintock said the board had analysed a number of alternatives, since its plan to merge the company into Healthscope was voted down a month ago.

"All possibilities were reviewed, including continuing to run Symbion Health as a standalone company, as well as other consolidation scenarios," he said.

"The conclusion of this review is that an alternative transaction with Healthscope and the IAC consortium is in the best interests of Symbion Health shareholders because it reflects the strategic value of our portfolio of assets and rewards Symbion Health shareholders for the available synergies."

Mr McClintock said the revised proposal was very similar to the original proposal, with shareholders receiving a combination of Healthscope shares and cash, with "value leakage" minimised to less than two per cent per share.

"Consistent with the original proposal, Symbion Health shareholders will own 53-56 per cent of the new merged Healthscope, enabling them to share in Healthscope's expected cost synergies," he added.

"In addition, the compelling strategic rationale is unchanged and the financial metrics remain strong."

Mr McClintock also said Symbion had not received any other proposals for the company or its businesses.

"Despite Primary Health Care stating that it continues to consider its options in relation to its investment in Symbion Health, no proposal has been received from Primary Health Care since Symbion Health received an incomplete, non-binding proposal from Primary Health Care in January 2007," he said.

The revised proposal attributes an enterprise value to Symbion of between $3.578 billion and $3.708 billion.

"Earnings per share attributable to Symbion Health shareholders are expected to be significantly enhanced as a result," Symbion said.

Pro-forma earnings per share before non-recurring items is expected to increase by 34 per cent, assuming Symbion shareholders retain their Healthscope shares and invest the cash consideration from the consumer and pharmacy proposal into Healthscope shares.

Healthscope managing director Bruce Dixon, said the merger was strategically compelling in May, when it was first proposed, and continues to make sense now.

"We've chosen this transaction structure over a number of alternatives because it preserves the commercial rationale for putting these businesses together in the first place," he said.

"We can build a first rank national health services company, spearheaded by the nations leading pathology network."

AAP