Bupa and Care First were last night locked in tense negotiations over the price of a takeover bid by the unquoted medical insurance company. According to industry sources, Bupa has offered 150p cash for each Care First share, valuing the company at pounds 240.5m. However, Keith Bradshaw, Care First's controversial founder and chairman, has been asking for nearer 170p a share.
Bupa is understood to be ready to mount a hostile offer, likely to be today, if it cannot get agreement from the Care First board. It is not yet clear whether Mr Bradshaw, who was pressured to resign by institutions for driving out the company's chief executive, Chai Patel, in August, will take a position on Bupa's board. It is believed that Mr Bradshaw has not made such an appointment a condition of an agreed deal.
A bid at 150p would net Mr Bradshaw, who owns more than 7 per cent of Care First's shares, some pounds 18m. A bid at this level would represent a 6 per cent premium to Care First's closing price of 141.5p yesterday, unchanged on the day. However, since Care First announced in late October that it was in talks which could lead to a bid, its shares have jumped from a 96.5p, five-year low, to reach 146p at one stage, though still well off the group's five-year high of 289p, struck at the end of 1993.
Schroders is advising Bupa while Care First is being advised by SBC Warburg Dillion Read. Bupa's intention to make a bid for Care First was first revealed by The Independent at the end of October. A spokesman for Bupa last night refused to comment, saying he would not speculate on rumours.
Buying Care First would add 135 nursing homes to Bupa's existing 76 homes, making it one of the UK's leading providers of integrated healthcare. Bupa has been aggressively buying up nursing home companies in the last year. In August it paid pounds 76m to buy Goldsborough Healthcare which owns 32 nursing homes and six private hospitals. Graham Smith, formerly chief executive of Goldsborough, is managing director of Bupa's nursing homes business and may run the Care First portfolio.
Care First, under the leadership of Mr Bradshaw, has had a turbulent history. Mr Bradshaw was criticised for growing the company, initially called Takare before it merged with Mr Patel's Court Cavendish company last year, too quickly.
The company has also been criticised for overspending on building low- quality homes, without, for example, ensuite toilets. Care First's overexpansion hit occupancy levels at the homes when funding pressures on local authorities increased in the mid 1990's, forcing the company to reverse its strategy.
Mr Patel was brought in to run the newly merged company on the expectation that Mr Bradshaw would retire. However, Mr Bradshaw made it clear he wanted to keep hold of the reins, and Mr Patel found it increasingly difficult to work with him, resigning last August. Since then Mr Bradshaw has been under pressure to resign.
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