Assura has agreed to Primary Health Properties’ (PHP) £1.79bn combination offer and will recommend the offer to its shareholders.

If the deal is completed, Assura shareholders will receive 0.38 new PHP shares and 12.5 pence in cash for each Assura share. It also includes a special dividend of 0.84 pence.

The update comes after the healthcare real estate investment trust (REIT) previously recommended KKR’s £1.6bn bid to shareholders in April. The US private equity firm described its offer as "superior" compared to PHP's bid.

Assura, which is listed on the FTSE 250, said it recognises the benefits of a combination with PHP. These benefits include shareholders remaining invested in a larger and more efficient REIT with a combined portfolio of £6bn, while being able to benefit from the "attractive long-term dynamics of the healthcare real estate sector".

Non-executive chair at Assura, Ed Smith, said: "Following recent engagement between PHP and Assura, PHP has today further increased the terms of its offer, and has also addressed some of the potential risks that Assura had previously raised.

"The Assura board has always been and will remain resolutely focused on carrying out its fiduciary duties in the interest of Assura Shareholders and in this context has decided to recommend this increased offer from PHP."

Head of property research at Quilter Cheviot, Oli Creasey, added: "Until recently, we had the sense that Assura was a bit too quick to align with KKR, and was reluctant to properly engage with PHP’s bid. That appears to no longer to be the case, with Assura now feeling ‘reassured’ about prior concerns the board had raised, specifically around elevated loan to value.

"Assura had previously faced accusations that, by promoting the lower bid, they were not seeking best value for shareholders. That accusation appears largely put to bed today, with PHP increasing its bid with an additional 0.84 pence special dividend. It's relatively small beer, but it is enough to put daylight between the two bids.

"The saga is nearing its conclusion, but it isn't done just yet. Adding to the drama, PHP's shares are down 3% this morning, narrowing the gap between the two bids. We don't think KKR will increase their offer, but they may not have to - another bad morning and PHP's shares would go past the crossover price of 96 pence. Given events to date, further twists and turns could be on the cards."

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