Symbion Caves In To Primary Bid

The Age

Tuesday February 12, 2008

Nabila Ahmed, Sydney

THE promise of an unconditional cash offer, diminishing prospects of a higher bid and recent declines in the sharemarket have combined to finally persuade Symbion of the merits of rival Primary's $2.7 billion takeover offer, with Ed Bateman poised to win control of his coveted assets today.

Dr Bateman, who has a controlling interest in 49.7% of Symbion's stock, welcomed Symbion's announcement that it would recommend his $4.10-a-share offer for the company once it secured majority support for the bid and declared it unconditional.

But as the pursuit that began six years ago neared completion, Dr Bateman, who had come under fire for some of his tactics in the past 12 months, said "vindication" was not 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 and in the circumstances of the current market and current situation, that is the case."

Symbion chief executive Robert Cooke said Symbion had to reassess its situation due to a combination of factors: Primary saying it would declare its bid unconditional if it reached majority support; Healthscope "falling away" as a rival suitor; and the market being dragged down by fears of a US recession.

"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 hospital group Healthscope, which holds almost 12% of Symbion and is negotiating a potential carve-up of Symbion's pathology assets with Primary.

With a recommendation from 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% control of Symbion.

Looking to persuade Healthscope to vote for the Primary offer, Dr Bateman warned that Primary would demand a higher price for the sale of Symbion assets if it did not have 100% control. "If it got to the situation where we didn't have 100% control of the company, the tax payable on the sale of those assets would be greater," he said. "Therefore, the price realised of those assets would be greater. Therefore, I think it's in everyone's interests to get to 100%."

Acquiring Symbion would give Primary control of 35.5% of Australia's private pathology market, elevating it to the country's second-biggest pathology provider behind Sonic Healthcare, which has 38%, according to UBS.

Shares in Primary, which is expected to launch a $1.4 billion equity raising campaign to fund its acquisition of Symbion, fell 36?, or more than 3%, to $10.24, while Symbion was 1? higher at $4.05.

Primary said yesterday its net income had fallen to $20.4 million, or 15? a share, in the six months to December 31, from $26.8 million, or 21? a share, a year earlier, due to costs associated with the Symbion takeover bid. Sales increased 15% to $155 million.

Primary announced a fully franked interim dividend of 22? a share, payable on March 17.

© 2008 The Age

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