Westminster launches pounds 75m bid for rival

Westminster Healthcare launched the first hostile takeover bid in the nursing home sector yesterday when it made a 170p-a-share offer for Goldsborough Healthcare, valuing the company at pounds 74.5m.

Goldsborough "emphatically" rejected the offer, describing it as "opportunistic and unwelcome." The company's shares closed 5p higher at 174p as rumours circled that the company's adviser, SBC Warburg, was seeking a white knight. It is thought that Westminster pitched the offer at such a premium to Friday's closing price of 119p to achieve a knock-out blow.

Westminster's hostile strike is part of a plan to diversify away from its traditional nursing home business which still accounts for 90 per cent of its sales. It has 84 nursing homes but has also moved into specialised health-care services such as retirement homes, rehabilitation centres and acute care as the nursing home market has come under pressure as local authorities clamped down on their healthcare budgets. As a result, occupancy levels have been falling. "The whole sector has been looking pretty sickly," one analyst said.

Goldsborough has moved further in its diversifcation, with 54 per cent of its profits coming from private hospitals and homecare schemes which provide care in the home for fee-paying patients.

Goldsborough's chairman, Sir Brian Hill, went on the offensive saying that Westminster was weak in these areas. "They have launched this hostile bid to fill the gaping hole in their strategy."

Westminster said it should be able to make cost savings through head office and administration cuts as well as buying efficiencies. However, analysts said there had been concerns that though Goldsborough had been innovative, it had lacked the resources to implement its ideas.

It also pointed to Goldsborough's poor financial performance since it came to the stock market in March 1994 priced at 170p. Prior to the offer, the shares stood at 119p and had underperformed the market by 38 per cent.

Westminster said it made an approach to Goldsborough last year and again on Friday and Sunday but was rejected each time. Under the terms of its offer Goldsborough shareholders will receive 54 new Westminster shares for every 100 Goldsborough shares held. There is also a cash alternative of 156.6p per share.

Westminster criticised Goldsborough both for its financial performance and its failure to win investor confidence.

The company is expecting this year's profits to be not less than pounds 17.4m.

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