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Woodford-backed Spire rejects bid approach

Woodford-backed Spire rejects bid approach

Shares in Neil Woodford-backed Spire Healthcare (SPI) shot up 12% today after the private hospital operator rejected a £1.2 billion bid approach from South African rival Mediclinic International (MDCM).

Mediclinic’s preliminary offer of cash and shares values Spire at 298.6p per share but has been deemed insufficient by Spire’s board.

Spire shares jumped 31.8p to 293.1p, just short of the indicative bid as Mediclinic, down 10.5p at 630p, considered its position.

The spike is a bit of good news for Woodford, the country’s leading equity income fund manager whose performance has suffered as a result of a number of stock disappointments in the past year.

Woodford Investment Management is Spire’s second biggest shareholder after Mediclinic with a 15% stake. Other leading investors include BlackRock, Capital Research and Norges Bank, according to Thomson Reuters data.

However, the rally only undoes some of the damage wrought last month when Spire shocked investors with a 75% slump in half-year profits caused by legal settlement charges. Since joining the stock market three years ago after being spun off by Bupa, the private health insurer, the shares have risen nearly 39%.

News of the bid approach made Spire the biggest riser on the UK stock market, although the FTSE All-Share index was off a point at 4,126.
The day’s big fallers were smaller companies Dialight and Pendgragon, both hit by profits warnings.

Dialight (DIAL), an industrial lighting products manufacturer spun off from Dutch electronics giant Philips, plunged 15% to 691p after cutting full-year profits because of short-term production problems.

Car dealership Pendragon (PDG) tumbled 17% to 24p after warning that full-year profits would fall to around £60 million, down from £75.4 million last year and lower than analyst forecasts of £75.2 million. It blamed a fall in demand for new cars for hitting the price of second-hand vehicles. Data this month showed new British car registrations fell 9.3% in September with sales on course for their first annual fall in six years.

The FTSE 100 was virtually unchanged at a point up at 7,524 as the political crisis in Catalonia weighed on European markets with the FTSEurofirst 300 index edging two points higher at 1,536.

GKN (GKN) was the fastest rising blue chip, gaining 3.3% to 313p, after the Sunday Times reported the engineering group was considering splitting its aerospace and auto component divisions into two separately quoted companies.

The shares are still recovering from a profits warning this month caused by disappointing trading in aerospace and a £15 million charge against its inventory and receivables balances. Liberum upgraded the stock to ‘hold’ from ‘sell’ today.

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Neil Woodford
Neil Woodford
85/85 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: -12.01%
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