In a dramatic twist to one of 2025’s most consequential REIT mergers, Primary Health Properties (LSE: PHP) has launched a £1.68 billion mixed cash-and-stock offer for rival Assura, directly challenging KKR/Stonepeak’s recommended all-cash take-private bid. The revised proposal – valuing Assura shares at 51.7p versus KKR’s 49.4p – has ignited debate about valuation methodologies in healthcare infrastructure assets and exposed fundamental strategic divergences about the sector’s future[4][5][17].
Deal Architecture Comparison
| Parameter | PHP Offer | KKR/Stonepeak Offer |
|---|---|---|
| Total Consideration | 0.3769 PHP shares + 12.5p cash | 49.4p cash |
| Implied Premium to 30-Day VWAP | 18.6% | 13.2% |
| Dividend Participation | Includes July 0.84p dividend | Cash offer ex-dividend |
| Combined Portfolio Value | £6.0 billion | N/A (Private ownership) |
PHP’s revised bid capitalizes on its 12-month total shareholder return of 14.3% versus the FTSE EPRA Nareit UK Index’s 6.8%, positioning the stock component as growth currency[2][8]. The offer structure preserves Assura investors’ exposure to what PHP Chairman Harry Hyman calls “the golden age of primary care infrastructure,” driven by NHS capital expenditure commitments exceeding £4 billion annually through 2030[7][8].
Competing Visions for Healthcare Infrastructure
PHP’s Scale Play
The combined entity would control 6.2% of UK primary care facilities, creating negotiating leverage with NHS contracting authorities. PHP estimates £9 million in annual cost synergies through:
- Consolidated property management platforms
- Optimized debt financing across £4.3 billion combined loan book
- Cross-selling asset management services to 1,100+ combined tenants[2][8]
KKR’s Value-Add Approach
The PE consortium plans to accelerate Assura’s development pipeline, targeting 15% IRR through:
- £350 million capex program for GP surgery upgrades
- Introduction of modular construction techniques
- Strategic disposals of non-core hospital assets[17]
Sector Dynamics Fueling Consolidation
Rental Growth Forecasts: 2025-2030 CAGR of 4.2% for primary care vs 2.1% for general UK commercial[8]
With 78% of PHP’s rent roll tied to inflation-linked leases and Assura’s portfolio showing 92% occupancy, both bidders are chasing predictable cash flows in a volatile rate environment. The deal comes as UK healthcare REITs trade at 18% NAV discount versus 10-year average of 7%[3][8].
Sources
https://www.globaldata.com/company-profile/primary-health-properties-plc/, https://www.phpgroup.co.uk, https://stockanalysis.com/quote/jse/AHR/company/, https://www.morningstar.co.uk/uk/news/AN_1747642764140026000/kkr-insists-its-assura-takeover-bid-is-better-after-php-counteroffer.aspx, https://media.quilter.com/search/2025/php-comes-back-to-the-table-with-competitive-bid-for-assura/, https://mergersandinquisitions.com/real-estate-financial-modeling/, https://www.youtube.com/watch?v=zT0QCG1Zr0c, https://www.theaic.co.uk/aic/news/industry-news/php-tables-ps168bn-offer-for-assura, https://www.w3schools.com/tags/tag_doctype.ASP, https://www.w3resource.com/html5/doctype.php, https://themeforest.net/item/news5-news-magazine-html5-template/53645565, https://www.dreamhost.com/blog/html5-semantic/, https://developer.mozilla.org/en-US/docs/Web/HTML/Element/article, https://www.woorank.com/en/edu/seo-guides/html-header, http://www.w3schools.com/Tags/tag_footer.asp, https://www.sitepoint.com/community/t/strange-symbols/253272, https://www.morningstar.com/news/dow-jones/202505191964/kkr-stonepeak-press-ahead-with-assura-offer-after-rival-suitor-raises-bid, https://www.digitalocean.com/community/tutorials/how-to-use-the-time-element-in-html5, https://jenkov.com/tutorials/html5/header.html, https://www.w3schools.com/css/css_rwd_viewport.asp
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