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Acurity takeover bid extended as ComCom decision pushed out

Connor Healthcare's takeover bid for private hospital operator Acurity Health Group has been pushed out to Dec. 12 after the Commerce Commission delayed its expected decision on whether to approve the deal.

The competition regulator is assessing whether the takeover by Acurity's three biggest shareholders will substantially lessen competition in the private hospital market in Wellington and the surrounding regions, given Connor investor Evolution Healthcare's ownership of Boulcott Hospital in Lower Hutt. Connor, whose other shareholders include the Stewart family and the Royston Hospital Trust, crossed the 90 percent threshold needed to mop up the remaining shares in Acurity last week, and the Commerce Commission's decision is the final hurdle needed to complete the bid.

Acurity yesterday reported a 22 percent increase in first-half profit to $4.9 million on a 14 percent gain in revenue to $56.5 million after increasing revenue from district health board work, and continuing to clamp down on costs.

The company anticipates to continue growing revenue over the next 12 months as the Wellington market improves with more DHB outsourcing and growth in insured and Accident Compensation Corp-covered patients. Acurity affirmed its guidance for a small lift in annual earnings before interest, tax, depreciation and amortisation from a year earlier, when it reported earnings before interest,tax, depreciation and amortisation of $20.2 million.

Connor tweaked the takeover earlier this month, seeking a two-for-11 fully imputed taxable bonus share issue to let shareholders gain access to $2 million in imputation tax credits. The deal meant Connor would cut its price per share to $6.13 from the $7.25 offer, leaving the total consideration paid to investors intact.

The shares were unchanged at $7, and have gained 29 percent this year.