Who?
Warrington healthcare provider and property company Assura Group.
Did what?
Has sold a 75.1 per cent stake in its medical services business to Virgin Healthcare.
What does this mean?
Assura will retain a 24.9 per cent share in Assura Medical and receive a £4m loan note which it must reinvest in the business. Its chief executive Richard Burrell will also join the board of Virgin Healthcare. In November, the business announced plans to separate its joint-venture GP business from its property and pharmacy operations in order to accelerate the prospect of a return to dividend payments.
Burrell said that with its strong brand and financial position, Virgin was the “ideal organisation to take Assura Medical’s business to the next stage of its development”. He added: “Assura will preserve the upside to the business through its 25 per cent stake, while focusing its activities on its profitable property and pharmacy businesses, capable of paying attractive dividends.”
In the six months to 30 September 2009, Assura Medical posted a pre-tax loss of £4.4m on a turnover of £100,000. The net assets of Assura Medical upon completion of the sale to Virgin will be around £13m. A total of 75 staff will transfer to Virgin.
Who advised?
The deal was led by Richard Harding and John Mock from Ernst & Young, with Addleshaw Goddard’s Philip Goodstone and Ed Jenkins providing legal advice to Assura.
Insider comment:
Virgin’s founder Sir Richard Branson said the group had been “extremely interested” in entering the healthcare market for some time, and the Assura was the “perfect partner” with which to do that. Virgin has committed to providing further funding to Assura Medical to promote the future development of the GP Provider Organisation (GPCo) business. Other than the reinvestment of the £4m loan note, Assura is not obliged to provide further funding to Assura Medical.
Assura said its board considered the future of the Assura Medical business was best served in conjunction with a strong partner organisation, like Virgin, which has access to long-term financial resources and whose brand and operational experience will enable the GPCos to flourish.
Assura Medical’s GPCos are healthcare provider organisations formed in partnership with groups of GPs. In total, the 30 GPCos represent partnerships with more than 1,500 GPs, employ approximately 150 staff and service more than 3 million patients in England.
