Primary Wins Glittering Prize

Sydney Morning Herald

Tuesday February 12, 2008

Nabila Ahmed

THE promise of an unconditional cash offer, the diminishing prospects of a higher bid and recent falls in the sharemarket have combined to finally persuade Symbion Health of the merits of Primary Health Care's $2.7 billion takeover offer, with the persistent Edmund Bateman poised to win control today.

Dr Bateman, Primary's managing director who has a controlling interest in 49.7 per cent of Symbion's stock, welcomed Symbion's announcement that it will recommend his $4.10 a share offer once it secured majority support for the bid and declared it unconditional.

As a pursuit that began six years ago neared completion, Dr Bateman, who had been criticised for some of his tactics in the past year, said he did not feel "vindication" was the correct word for his feelings.

"Each side has to fight its own fight as it sees it, and it is part of the process of arriving at what's a fair price," he said. "And to be fair to both parties, we've arrived at a fair price."

Primary yesterday said its net income fell to $20.4 million, or 15c a share, in the six months to December 31, 2007, from $26.8 million, or 21c a share, a year earlier, due to costs associated with its takeover bid for Symbion.

Primary borrowed $534.3 million to fund its bid for Symbion, with the $22 million interest paid on the loan slashing its profit before tax to $26.7 million from $37.6 million a year earlier. Sales rose by 15 per cent to $155 million.

Primary opened five new medical centres in the first half, and now has 40. Revenue from the centres rose by 17 per cent to $91.9 million. The company announced a fully franked interim dividend of 22c a share, payable on March 17.

Symbion's chief executive, Robert Cooke, said the company had been forced to reassess the situation in which it found itself when Primary said it would be declaring its bid unconditional if it reached majority support; as Healthscope "fell away" as a rival suitor and the market was dragged down by fears of a recession in the US.

"It's a good cash price for shareholders, given the circumstances," Mr Cooke said. "Symbion's underlying business remains strong and there's no doubt it will have a bright future."

Dr Bateman, known for his tough negotiating tactics, immediately began exerting pressure on Healthscope, which holds almost 12 per cent of Symbion and is trying to negotiate a potential carve-up of Symbion's pathology assets with Primary.

With a recommendation by Symbion's board expected to persuade most shareholders to vote for the Primary offer, Healthscope could be the final sticking point as Primary attempts to gain 100 per cent control of Symbion.

Looking to persuade Healthscope to vote into the Primary offer, Dr Bateman warned that Primary would be demanding a higher price for the sale of Symbion assets if it did not have full control because of the higher capital gains tax it would be required to pay in that situation.

Shares in Primary fell by 36c, or more than 3 per cent, to close at $10.24 yesterday, while Symbion shares gained 1c to close at $4.06.

© 2008 Sydney Morning Herald

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