Spire Healthcare, one of the largest UK operators of private hospitals, said on Monday that it has rejected a £1.2bn takeover offer from Mediclinic.

South Africa-based Mediclinic made a cash and stock offer that values Spire at 298.6p a share, Spire said in a statement. That represents a premium of about 14 per cent to last Friday’s closing price.

Spire’s board said it reviewed proposal that was made on October 18 and determined that it “significantly undervalues Spire and its prospects.” In a separate statement on Monday, Mediclinic said it was “considering its position”, adding that the terms valued Spire at a 30 per cent mark-up to its closing price the evening before the offer was made.

Mediclinic is Spire’s largest shareholder, according to Reuters data, owning 29.9 per cent.

Spire, which is a member of the FTSE 250 index, operates 39 hospitals, 10 clinics and two specalist cancer centres across the UK. London-listed Mediclinic has operations stretching from South Africa, to Switzerland and the United Arab Emirates.

Jefferies analyst James Vane-Tempest said that “with no core asset base in the UK … Spire would provide a sizeable UK market presence where Mediclinic already has working knowledge with likely no anti-trust issues.”

However, he noted that “we see very limited synergies with a deal, so are yet to be convinced of the potential value creation for Mediclinic to pay a change of control premium when it already has influence with a seat on the board.”

Spire’s shares climbed 11.2 per cent after the open on Monday to 290.5p. The discount to the proposed offer price highlights investor doubts that the deal will be completed.

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