In these circumstances, the Symbion Health Directors would accept Primary's Offer in relation to the Symbion Health shares they own or control. Primary's Offer is currently scheduled to close on 21 February 2008.
Mr Paul McClintock, Symbion Health Chairman said:
"Last Thursday the Symbion Health Board announced that it would reconsider its recommendation in the event that Primary achieves interests in Symbion Health of greater than 50.1% and declares its Offer unconditional. This review has been completed and the Symbion Health Board has determined that in these circumstances it will recommend that Symbion Health shareholders accept Primary's Offer.
"The key reasons for the Board's previous rejection of Primary's Offer - being that it did not adequately compensate Symbion Health shareholders for the value of the strategic benefits and synergies which Primary expects to realise from acquiring Symbion Health, it was highly conditional, and the Symbion Health business had strong prospects going forward under the current management team - will have all changed significantly.
"The sharemarket has become increasingly volatile, falling 13% since Primary's Offer was announced, which has increased the risk of a decline in Symbion Health's share price upon the close of Primary's Offer, and has impacted the Board's view on relative value in the current environment. If Primary's Offer becomes unconditional all Symbion Health shareholders have the opportunity to receive $4.10 cash per share, if they choose to do so. It has also become evident that it is unlikely that any superior offer for Symbion Health will emerge in the foreseeable future.
"Furthermore, if Primary controls more than 50.1% of the shares in Symbion Health it will be able to cast the majority of votes at a general meeting of Symbion Health. This would likely result in a new Board and management team controlling the strategic direction of the businesses of Symbion Health.
"Robert Cooke and his management team have made significant progress in Symbion Health's businesses over the past two years, improving the company's performance and positioning it to be a key beneficiary of industry consolidation. Furthermore, they managed to ensure that the Company has continued to perform throughout this process.
"In addition, those shareholders who have held Mayne shares since the time of the demerger would have realised significant value if the Primary Offer proceeds, with Hospira acquiring their Mayne Pharma shares for $4.10 cash per share and now Primary seeking to acquire their Symbion Health shares for $4.10 cash per share. This represents a total of $8.20 cash per equivalent Mayne share, compared with Mayne's share price of $3.53 prior to the announcement of the demerger in May 2005.
"Symbion Health and Primary have commenced discussions on an orderly transition of control of the Company in the event that Primary achieves interests in Symbion Health of more than 50.1% and declares its Offer unconditional", Mr McClintock said.
The reasons for the Symbion Health Directors' revised recommendation in the event that Primary achieves interests in Symbion Health of greater than 50.1% and declares its Offer unconditional are as follows:
. given the recent sharemarket volatility, there is increased risk that Symbion Health's share price will fall after Primary's Offer closes (the S&P/ASX 200 has fallen 13.2% since Primary's Offer was announced);
. uncertainty regarding the future strategic direction and management of Symbion Health. The Symbion Health Board and management will no longer be in a position to execute its strategies;
. liquidity in Symbion Health shares is likely to be reduced;
. notwithstanding that Primary has indicated that it expects to realise significant cost and revenue synergies as a result of acquiring Symbion Health, the amount of synergies that will accrue to Symbion Health shareholders is unclear;
. uncertainty regarding Symbion Health's future dividend policy; and
. substantial potential tax leakage which might arise as a result of Primary procuring that Symbion Health undertakes a sale of substantial assets. Primary has indicated that it intends to procure Symbion Health to divest its Consumer and Pharmacy Businesses together with other selected assets.
Symbion Health shareholders should have regard to their own personal circumstances when deciding whether or not to accept Primary's Offer. The Directors of Symbion Health note that some Symbion Health shareholders might want to reject Primary's Offer and retain their Symbion Health shares. Reasons why Symbion Health shareholders might want to retain their Symbion Health shares are as follows:
. retain exposure to Symbion Health's businesses which have strong fundamentals;
. have the opportunity to benefit from sharing in the substantial cost and revenue synergies claimed by Primary that might be realised as a result of Primary controlling Symbion Health;
. minimise the prospects of creating a significant capital gains tax liability for individual Symbion Health shareholders (depending on their individual circumstances);
. have the ability to participate in any higher offer which Primary might make to acquire Symbion Health shares at a later time; and
. have the opportunity to benefit from any future "break-up" of Symbion Health's businesses.
In deciding whether or not to accept Primary's Offer, Symbion Health shareholders should also have regard to a number of factors including those set out below.
. Healthscope has disclosed that it has an economic interest in Symbion Health of 11.91% and has had a strategic interest in the Diagnostics Businesses of Symbion Health for some time. If the shares in which Healthscope has an economic interest are not accepted into Primary's Offer, Primary will not acquire a relevant interest in Symbion Health of more than 90% and be entitled to compulsorily acquire all of the shares in Symbion Health, meaning Symbion Health is likely to remain listed on ASX.
Conversely, if the shares in which Healthscope has an economic interest are accepted into Primary's Offer and Primary achieves a relevant interest in more than 90% of Symbion Health shares, Primary has indicated that it intends to exercise its right to compulsorily acquire all remaining Symbion Health shares. If Primary exercises this right, the holders of the Symbion Health shares that are compulsorily acquired will receive payment for those shares later than if they had accepted Primary's Offer.
. Primary has stated in its Bidder's Statement its intentions if it obtains a relevant interest in Symbion Health of between 50.1% and 90%. These include:
- the divestment of the Consumer and Pharmacy Business;
- the acquisition by Symbion Health of Primary's pathology business;
- the acquisition by Primary of Symbion Health's medical centre management businesses;
- the sharing of radiology resources and infrastructure; and
- the supply of IT services and infrastructure by Primary Group to Symbion.
Minority shareholder approval may be required for the implementation of some of these stated intentions.
. Minority shareholders in Symbion Health have rights under the Corporations Act against conduct that is oppressive, unfairly prejudicial or unfairly discriminatory to them.
If Primary achieves interests in Symbion Health of greater than 50.1% and declares its Offer unconditional, Symbion Health will issue a Supplementary Target's Statement reflecting the change in the Symbion Health Board's recommendation.
For further information please contact:
Caroline Ingham
Investor Relations Manager
Symbion Health Limited
Ph: +61 3 9918 2802
Mob: +61 419 526 355
