Today Symbion Health (SYB) announced that the Australian Tax Office (ATO) has ruled that it cannot benefit from scrip for scrip capital gains tax rollover relief in the $2.8 billion bid from private healthcare operator Healthscope (HSP).
In consequence, the acquisition of Symbion's diagnostics business will not go ahead, a change from the confident tune Symbion was displaying yesterday.
"We are very disappointed," said Symbion Chairman, Paul McClintock.
"Symbion Health had expected to receive all the regulatory approvals required to implement the proposed diagnostics transaction."
"Given the ATO's decision, Symbion Health shareholders will miss out on the opportunity to participate in the very substantial benefits which were expected from the diagnostics transaction."
The Healthscope bid, which had received unanimous support from the Symbion board, was conditional upon securing a favourable ATO ruling.
The proposal had been hotly opposed by Primary Health Care, which holds a 20% stake in Symbion and has also made its own takeover offer for Symbion for $2.65 billion.
Symbion rejected the takeover offer from Primary as too low.
"The Symbion board is unanimous and resolute in continuing to reject Primary's inadequate and highly conditional offer," said Mr McClintock.
Due to the collapse of the bid, Healthscope has now taken a 10% stake in Symbion via an entity swap arrangement with Goldman Sachs JBWere Capital Markets over 64.7 million Symbion shares at $4.09 per share.
"Healthscope believes that the swap will give it an opportunity to participate in the determination of control of Symbion Health," the private healthcare company said in an announcement.
Healthscope said the swap was for a period of six months, and each party has an early termination right.
Nevertheless, the swap does not confer upon Healthscope any rights in relation to voting upon Symbion shares.
Meetings for Symbion and Healthscope shareholders that had been scheduled for Friday to vote upon the Healthscope proposal have now been cancelled.
Symbion fell by almost 2.94% or 12 cents today to close down at $3.96.
Healthscope, on the other hand, rose by 9 cents to close the day at $5.52.
