RHC has expanded its UK reach, with a GBP1.0bn take out offer for Spire Healthcare (SPI) via a scheme of arrangement. We believe SPI shareholders will vote in favour of the deal, with the Board viewing terms as “fair and reasonable” and getting commitments from 30% of the register, with a low likelihood of any counter offers. While divisional profit more than doubles, overall earnings/returns appear more modest, are only realised fully in outer years, and at risk given they are contingent on the CMA review, which we believe is more than likely to require divestments. We make no changes to our FY21-23 earnings forecasts at this time, maintaining our DCF/SOTP based target price of A$65.54 and Hold rating.
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