Two GP premises-owning firms could combine in £1.8bn deal

Two major corporate owners of GP premises in England could combine under a proposed £1.8bn deal.

Primary Health Properties (PHP) has announced a cash and shares offer worth £1.79bn which would see it combine with Assura in a REIT (Real Estate Investment Trust).

PHP owns 516 primary healthcare facilities valued at £2.8bn, while Assura’s 603 buildings are worth £3.2bn, the vast majority of which are GP premises.

As of 2024, Assura made £87.3m in rent from its GP surgeries, which have a combined patient list of over six million – just under 50% of its rental income.

Andy Pow, advisor to the Association of Independent Specialist Medical Accountants (AISMA) board, said: ‘The Government have commenced a market engagement exercise on private sector investment in Primary and Community Health Infrastructure as part of its 10-year plan.

‘Assura and PHP have been long established in the sector owning and developing new GP premises and a merger will likely give them a strong platform to assist the Government with its aims to introduce new buildings into communities.

‘Ultimately how successful that will be will depend on the Government providing new funding through recurrent rental payments to support the investment needed.’

Assura’s non-executive chair Ed Smith said: ‘The Assura Board has always been and will remain resolutely focused on carrying out its fiduciary duties in the interest of Assura Shareholders and in this context has decided to recommend this increased offer from PHP.’

Altrincham-based Assura, which owns more than 600 GP surgeries and private hospitals, had previously agreed to a £1.6bn takeover by Bidco, a company funded by US private equity firms KKR and Stonepeak. 

But PHP’s valuation represented a 5.8% increase on Bidco’s 50.42 pence-per-share cash offer and PHP added the option of a 0.84 pence special dividend, bringing the value to 55 pence per share. 

PHP had raised concerns about Assura’s ‘level of engagement, objectiveness and responsiveness’ after it rejected PHP’s previous offer, citing perceived financial risk.

However, the special dividend appeared to change Assura board’s minds with Mr Smith saying PHP had ‘addressed some of the potential risks that Assura had previously raised.’

In order to go ahead, the proposed deal requires acceptance by more than 50% of Assura shareholders and they have until 12 August to accept this offer, according to their revised offer document.

Assura’s board announced the withdrawal of its recommendation of Bidco’s offer and advised shareholders to ‘take no action’ in relation to it. 

PHP’s non-executive chair Harry Hyman said: ‘The PHP board continues to believe in the strong strategic rationale of the combination, which will create a leading healthcare focussed listed REIT with the scale and expertise to deliver significant benefits for the Shareholders in PHP and Assura.‘

In May, The Department of Health and Social Care (DHSC) announced that a £100m capital funding pot previously ‘earmarked’ for 200 GP upgrades would need to stretch to over 1,000 GP practices. 

In 2023, US healthcare giant UnitedHealth – which functions as Optum in the UK – bought GP IT supplier EMIS for £1.2bn after the deal was cleared by the UK’s Competition and Markets Authority (CMA). 

And the same year, US medical insurance company Centene sold Operose Health – which runs nearly 60 GP practices – to HCRG Care Group.