ymbion scoffs at Primary's offerAFTER months stalking its much...

ymbion scoffs at Primary's offer


AFTER months stalking its much bigger rival, Primary Health Care has launched a $2.3 billion hostile takeover for Symbion Health.
But Primary founder and managing director Edmund Bateman was not calling it a takeover. It was "a merger of equals".

Symbion disagreed, with chief executive Robert Cooke dismissing the $3.50-a-share cash offer as "disruptive and cheeky".

"The offer is neither fair nor reasonable and shareholders could not possibly even consider it," Mr Cooke said.

Primary, which yesterday reported a 20 per cent lift in first-half net profit to $26.8 million, revealed details of the takeover which it proposed to Symbion on December 21.

Primary was offering one Primary share for every four Symbion shares subject to negotiation.

Alternatively, Primary Health Care proposed a cash offer of $3.50 per Symbion Health share.

Mr Cooke said Symbion was a much bigger company than Primary, with revenues of more than $3.2 billion across five major businesses and employing more than 11,000 staff.

Primary, on the other hand, operated a niche market of medical centres which turned over revenues of $300 million and had a staff strength of 700.

Primary also wanted to manage the merged company.

"This is definitely not a merger of equals," Mr Cooke declared.

But Primary said its cash offer of $3.50 a share was at a premium compared with the three-month weighted average of Symbion shares of $3.28. It also said a merger with Symbion would bring synergies of between $40 million and $100 million.

"The scale of synergies and the present opportunity are compelling for both sets of shareholders," it said. "Primary does not see equal alternative value-accretive options for Symbion."

Mr Cooke disputed the figure, saying it was not "realistic or achievable".

A better option was for Symbion to take over Primary's pathology business and he was prepared to pay a fair and reasonable price. Mr Cooke said the company had a strong management team which turned around the business and improved its share price significantly.

Symbion is the country's third-biggest drugs wholesaler, with about 30 per cent market share. It operates 75 pathology laboratories controlling about 33 per cent of the market compared with Primary's 5 per cent.

According to Merrill Lynch, Symbion's biggest presence is in Queensland, Western Australia and Victoria while Primary's strength has always been in NSW.

Analyst Hamish Tadgell of Goldman Sachs JB Were said Primary could increase its offer and pay up to $4.65 for Symbion if it could find a buyer to offload the pharmacy business.

"If nothing else, Primary's move has woken the market up to the potential strategic value of Symbion's portfolio of assets in a consolidating market," he said.

Primary was founded by Mr Bateman in 1975 and he continues to hold a 20 per cent stake in the company. Its power base is in 40 medical centres which also operate a pathology unit and an in-house pharmacy.

Primary shares closed 9c down at $13.75 while Symbion shares fell 3c to $4.06.