Primary Health Care has attempted to throw a spanner into the proposed second merger deal between Healthscope and Symbion.
Primary (PRY) late yesterday revealed it would vote against Symbion's (SYB) revised deal to sell its diagnostic business to Healthscope (HSP) and the proposed scheme of arrangement in relation to Symbion's consumer and pharmacy business.
Primary said its decision was conditional on no material "change in circumstances or in the structure of the Revised Proposal".
But the statement is short on what Primary would offer Symbion shareholders by way of price for their shares, or a price on the assets it wants to make it go away.
It's another example of a wannabe takeover player falling a bit short of the resources to mount a credible counter-offer and instead depending on thereat and bluster to try and scare its opponents into taking it seriously.
It has already blocked the first merger deal and this attempt is trying to raise the spectre of a second knock-back.
But primary doesn't quite have the 25% of SYB's share necessary to make sure it can block the arrangement whereby Symbion buys the diagnostic and associated businesses in one transaction and Symbion then sells its consumer and distribution businesses to two private equity groups (Ironbridge and Archer Capital) by way of a scheme of arrangement.
Under PRY's latest statement, that deal could be stymied, leaving the future of the two businesses uncertain.
Primary's statement was released after trading had finished yesterday.
Primary shares were hammered by investors in yesterday's easier market.
They fell 37c to $11.37 ahead of the release. That's within 70c or so of the 52 week low of $10.63.
In contrast HSP shares rose 3c to $5.34 and SYB shares were unchanged at $4.05, a point Primary didn't make when it highlighted the SYB share price at the end of yesterday's statement.
It's the second time this month that Primary has indicated its displeasure with the second proposal from HSP and SYB.
It said on October 12 that the second proposal was "value destructive" and urged SYB management and board to heed its ideas.
Yesterday PRY went the threat route by saying it "notes that the proposed scheme of arrangement in relation to the Consumer and Pharmacy business proposal requires approval by the holders of at least 75% of Symbion shares voted at the scheme meeting.
"Given Primary's voting intentions, the outcome of the scheme vote is far from certain, particularly having regard to the voting outcome in the original proposal.
"Primary has written to Ernst & Young Transaction Advisory Services (E&Y) 1 (the Independent Expert engaged by Symbion in relation to the original proposal with Healthscope) to advise them of Primary's voting intentions, given their relevance to the Revised Proposal.
"Primary has also raised a number of other matters with E&Y reflecting Primary's broader concerns regarding the inherent value of the Revised Proposal, including: the value realisable for Symbion's shareholders in respect of Symbion's consumer and pharmacy business if the C&P Proposal is rejected; the value of the Diagnostics Proposal and in particular the value of the Healthscope consideration being offered and the amount of any tax leakage under the Revised Proposal if ATO approval of capital gains tax and demerger relief is not forthcoming.
"Primary remains concerned that a favourable ATO ruling may not be received.
"Primary notes that the current trading price of Symbion is around $4.05 per share."
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