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MARKET REPORT: UDG Healthcare takeover in trouble

MARKET REPORT: Proposed takeover of UDG Healthcare by private equity firm Clayton, Dubilier & Rice runs into trouble

The proposed takeover of UDG Healthcare by private equity firm Clayton, Dubilier & Rice has run into trouble. 

The board of UDG, which is based in Dublin and specialises in healthcare advisory, communications, commercial, clinical and packaging services, last week backed a 1023p offer from CD&R worth £2.6billion. 

But its biggest shareholder has now come out against the deal. 

Allianz Global Investors, which has an 8.6 per cent stake, said it ‘firmly believes that the offer is opportunistic and significantly undervalues UDG and its prospects and is not in the best interests of shareholders’. 

It added: ‘Consequently, based on available information, AllianzGI is minded not to accept the current offer despite it being recommended to shareholders by the Board of UDG. Allianz is open to discussion and would like to use this statement to remind the Board of UDG of its duty to obtain a fair value for shareholders.’ 

Shares rose 2.2 per cent, or 22p, to 1046p – well above the 1023p agreed price – in a sign that investors believe CD&R or another bidder will come back with a better offer. UDG is one of a number of FTSE 250 firms in the cross hairs of private equity, with John Laing (down 0.2 per cent, or 0.6p, to 403.8p), St Modwen (up 0.6 per cent, or 3.05p, to 548.05p) and Sanne Group (down 0.1 per cent, or 1p, to 739p) all receiving approaches. 

But John Laing seems to be having more luck than UDG. 

Schroders, its second-biggest shareholder with a 9.3 per cent stake, has thrown its weight behind a £2billion bid from KKR. 

A spokesman for Schroders said: ‘As a major shareholder in John Laing we believe management have secured a fair deal for all stakeholders.’ The comments come two days after the 403p-ashare approach by KKR, which has been approved by the board and will require 75 per cent of investors to agree. KKR is keen to tap into the high-growth markets as governments globally tackle the need to decarbonise. 

Bin collector Biffa was the toast of the City as it beefed up its business with a £126m deal. The company – set up in Wembley in 1912 by Richard Henry Biffa – has agreed to buy the industrial waste business and some recycling operations from Viridor. 

The deal comes just over a year after Viridor was sold by British water company Pennon (down 0.4 per cent, or 4p, to 1058.5p) to private equity giant KKR for £4.2billion. 

Biffa reckons the acquisition will bring in an extra £85m of revenues a year and is also eyeing £10m of cost savings within 12 to 18 months of completion. 

Chief executive Michael Topham described it as ‘a compelling opportunity for Biffa’. 

Analysts agreed. Peel Hunt upgraded its rating on the stock to ‘add’ from ‘hold’ as it hailed an ‘attractive, classic, bolt-on deal’. 

And investors liked it too with shares rising 6 per cent, or 16.5p, to 293.5p – its highest level since February last year. 

A flurry of upbeat economic news – including a 9.2 per cent jump in retail sales last month following the lifting of lockdown restrictions on April 12 – did little to help the wider market. 

The FTSE100 index closed down 0.02 per cent, or 1.74 points, at 7018.05, while the FTSE250 was up 0.03 per cent, or 7.42 points, at 22,399.42. In the world of crypto, bitcoin fell back below $40,000 after a brief rally, leaving it well off last month’s peak of around $63,000. 

The volatility has done nothing but harm to bitcoin miner Argo Blockchain, whose shares fell another 10.4 per cent, or 14p, to 121p. The stock was trading below 5p late last year before soaring to a peak of 284p in February, more than twice last night’s closing price. 

Recruiter Staffline fell 18.5 per cent, or 13p, to 57.2p as it unveiled plans to tap investors for £48.4m to pay down some of its debt.