Private equity’s aggressive push into Britain’s listed companies has long drawn criticism, but recent developments suggest a subtle shift towards greater shareholder resistance. Notably, NHS and healthcare property investor Assura’s decision to side with rival Primary Health Properties (PHP) over a private equity buyout led by KKR has been hailed as a rare win for shareholder influence, even if the final outcome remains in flux.

Assura had initially agreed to a £1.6 billion cash takeover led by private equity firms KKR and Stonepeak Partners, an offer representing a 32% premium over its share price before the bidding war began. KKR’s consortium argued that private ownership would allow Assura to pursue capital investment opportunities without the constraints of public market pressures. However, this deal faced competition from PHP, which proposed a mixed cash-and-shares offer valued at around £1.5 billion initially, later increasing to a £1.7 billion bid. PHP’s offer, which combines cash with shares, was designed to keep Assura within the public market fold, presenting shareholders the choice to stay invested and benefit from future sector growth. This rivalry has paused Assura’s acceptance of the KKR deal as the company evaluates the higher, primarily share-based offer from PHP, underscoring the complex calculus investors face between guaranteed cash and potential long-term gains.

Similar shareholder resistance has been seen in the logistics real estate sector, as exemplified by Tritax EuroBox’s recent decision to merge with Brookfield Asset Management, spurning a competing offer from Segro. Tritax chose the higher certainty of Brookfield’s $1.44 billion all-cash offer, reflecting investor preference amid a market where logistics properties—driven by the expanding e-commerce sector—are increasingly valuable.

This mounting pushback on private equity takeovers contrasts with a long history of UK boards capitulating to such bids, often under pressure from advice suggesting rejecting offers might breach fiduciary duties. Critics argue that many of these deals have undervalued companies and harmed UK industries, especially in strategic sectors like defence, where cuts in government spending after the Cold War left mid-sized suppliers vulnerable to foreign buyouts. This has led to a migration of ownership overseas and damage to the UK’s industrial base, including loss of innovation and proprietary technology.

Share price performances further illustrate what might have been. Defence contractor Babcock’s shares have surged this year, prices rising by more than 129% following strong revenue and profit growth, offering a stark contrast to firms sold at depressed valuations to private equity. Meanwhile, few examples of private equity-backed British companies returning successfully to public markets endure, with some, like payments processor Worldpay, relocating to the US.

The unfolding scenario at Assura is reflective of a broader reassessment among investors and UK boards about the merits of private equity ownership. While private equity offers immediate premiums, the long-term strategic implications for shareholders and national economic assets are prompting calls for a more cautious approach. The current battle between cash certainty and growth potential signifies a nuanced evolution in UK capital markets, where shareholder voices may increasingly shape the fate of key companies.

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Source: Noah Wire Services