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New shares in Primary Health tradeable following MedicX merger

Primary Health and MedicX to merge

New shares in Primary Health tradeable following MedicX merger – following on from the announcement on 14 March 2019 by MedicX Fund Limited and Primary Health Properties (PHP) that their merger had become unconditional in all respects, PHP announced that dealings in the new shares became effective at 8.00 a.m. today (March 15, 2019). The shares will trade on the London Stock Exchange main market.

The merger between the two real estate investment trusts was agreed in late January 2019, with existing MedicX shareholders receiving 0.77 new shares for each existing MedicX share they held. The deal sees PHP owning 69% of the new entity. These new shares rank equally in all respects with the existing ordinary shares in issue, including the right to receive and retain dividends and other distributions.

Merger creates UK’s largest healthcare property investor

The merger has created the UK’s largest healthcare property investor with a portfolio of nearly 500 properties worth £2.3bn. At around 90%, the NHS accounts for the vast majority rental income generated by the original PHP portfolio, with pharmacies picking up most of the rest.

The PHP and MedicX boards believe that there is a compelling strategic, operational and financial rationale for the merger.

  • The two companies’ respective portfolios are highly complementary and the combined business will represent a stronger platform with increased scale and financial resources for further investment into its NHS-supporting estate.
  • The enlarged group will be more able to meet the increasing demand for high quality primary healthcare facilities across the UK and the Republic of Ireland thereby supporting doctors, alleviating pressure on hospital departments and ultimately aiding the welfare of patients.
  • Combining the two businesses is expected to create significant value for both MedicX and PHP shareholders through operational and investment management synergies, leading to a reduced EPRA Cost Ratio, as well as financing savings over the medium term.
  • Nexus, which provides property management, administrative and advisory services to PHP, has agreed to provide such services to the enlarged group, with certain employees of Octopus Healthcare, MedicX’s existing investment adviser, and OAIFM, MedicX’s existing investment manager, transferring to Nexus.

The combined company will have:

  • portfolio of 479 properties in the UK and the Republic of Ireland with a combined value of approximately GBP2.3 billion;
  • a strategic focus on the delivery of primary healthcare reflected in the increase in funding set out in the NHS Long Term Plan published earlier this month;
  • an enhanced ability to meet the increasing needs of the primary healthcare sector in the UK and the Republic of Ireland, for the provision of a range of modern, purpose-built and integrated primary healthcare services to the local communities;
  • significant cost savings, estimated at GBP4.0 million per annum from the end of the first full yea (reducing to GBP3.5 million from year six), equivalent to an annual saving of 0.4 pence per share. This is made up of:
    • immediate savings in aggregate management fees arising from the unification of management under Nexus, PHP’s existing property adviser, which are estimated to represent an annual saving of GBP3.0 million (GBP2.5 million from the sixth year following the Effective Date); and
    • operational cost savings from duplicated listing, administrative and other operational expenses and direct property costs which are estimated at GBP1.0 million per annum by the end of the first full year of operation following the Effective Date;
  • an EPRA Cost Ratio expected to be the lowest in the UK-REIT sector;
  • broader access to capital at a reduced cost – over the medium term it is expected that there will be opportunities for material additional cost savings through optimising financing arrangements.

PHP / MXF : New shares in Primary Health tradeable following MedicX merger

2 thoughts on “New shares in Primary Health tradeable following MedicX merger”

    1. The court sanctioned the scheme of arrangement on 14 March 2019, from the announcement on that date “Dealings in MedicX Shares on the London Stock Exchange’s main market for listed securities and the listing of MedicX Shares on the premium listing segment of the Official List of the FCA have each been suspended with effect from 7.30 am today, 14 March 2019. It is expected that the admission to trading of MedicX Shares on the London Stock Exchange’s main market for listed securities and the listing of MedicX Shares on the premium listing segment of the Official List of the FCA will each be cancelled with effect from 8.00 am tomorrow, 15 March 2019.
      Consideration due to Scheme Shareholders
      Scheme Shareholders on the register of members of MedicX at the Scheme Record Time (being 6.00 pm yesterday, 13 March 2019) will receive 0.77 New PHP Shares for each Scheme Share held at the Scheme Record Time. As further described in the Scheme Document, New PHP Shares in uncertificated form are expected to be credited to CREST accounts on or soon after 8.00 am on 15 March 2019 (but no later than 28 March 2019) and definitive share certificates for the New PHP Shares in certificated form are expected to be dispatched by no later than 28 March 2019. Cash consideration due under the Scheme in respect of the sale of fractional entitlements will be settled via CREST (for the New PHP Shares held in uncertificated form) or by cheque (for the New PHP Shares held in certificated form) by no later than 28 March 2019
      .”

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