The fate of Healthscope's $2.9 billion bid for rival Symbion, with two private equity partners, now rests in the hands of Healthscope following the expected offer from Sigma Pharmaceuticals and a leading corporate advisory firm.
That sounds complicated, but that's effectively the situation and we should all know the outcome by Friday.
Sigma and "the CWC Entity," (which is linked to the corporate advisers, Carnegie Wylie & Company) lobbed their bid by the deadline of midnight Monday.
It was a bid to acquire the consumer and pharmacy services divisions of Symbion for a total enterprise value of $1.085 billion, some $42 million more than the $1.043 billion enterprise value placed on the businesses by Healthscope and its partners, Ironbridge Capital and Archer Capital.
Under the offer, Sigma intends to acquire Symbion's consumer business, which includes vitamins and health supplements, and the CWC Entity would acquire Symbion's pharmacy services business.
Symbion said the Sigma joint offer was superior to the HSP offer (a decision required under the agreement with Healthscope, in the event of another offer)
Healthscope would retain Symbion's pathology, imaging and medical centres divisions and Ironbridge and Archer would then acquire Symbion's pharmacy services and consumer businesses at an enterprise value of $1.043 billion.
That way competition questions and a probe by the ACCC would be avoided: the reason also for the structure of the Sigma proposal.
Symbion said in a statement to the ASX yesterday that the Sigma joint offer for Symbion's consumer and pharmacy divisions was $42 million higher than the implied enterprise value of offered by Ironbridge and Archer.
Symbion said the Sigma joint proposal was not conditional upon approval of competition regulator the Australian Competition and Consumer Commission, due diligence or financing.
But this is where it gets interesting and places the onus on Healthscope.
Under the terms of the agreement with Symbion, Healthscope now has two clear working days to make a higher offer than the $1.085 million from Sigma.
The higher price from HSP is not required to be 'materially above' to the Sigma offer.
This holds out the prospect that HSP could bid $1 more than $1.085 million and win the day.
Symbion said that under the scheme implementation deed of the original Healthscope offer, if Healthscope made a superior counter proposal to Sigma's joint offer, the Symbion board would not be allowed under the deed to consider further revised offers for the consumer and pharmacy services divisions from other parties, including Sigma.
Symbion said it would now provide Healthscope an opportunity to come up with a superior proposal; thus placing the responsibility for the future of its offer squarely on the HSP board, and giving Sigma no way to submit a new and higher offer.
Symbion said a superior counter-proposal would have to be above $1.085 billion.
Both offers contain 'break fees' of more than $10 million but Symbion would not necessarily be responsible for payment to Sigma of any fee if it accepted a new and higher offer from HSP.
If the Sigma joint offer prevails, Sigma and "the CWC Entity" will enter into a deal with Healthscope which is on the same terms as the deal between Healthscope and Ironbridge Capital and Archer Capital.
In other words, Sigma and the CWC Entity will take the place of Ironbridge Capital and Archer Capital and Healthscope will still get Symbion's pathology, diagnostic imaging and medical centres divisions.
