SHARES in healthcare and communications group Huntsworth skyrocketed yesterday after a US-based private equity firm said it has agreed a takeover deal worth roughly £400m.

Clayton, Dubilier & Rice (CD&R) yesterday said it would pay 108p in cash per share for the owner of City PR giant Grayling, which provides marketing services to healthcare clients. The offer represents a 50 per cent premium on Huntsworth's closing price on Monday. However, shares surged almost 53 per cent to 110p following the announcement yesterday. Analysts at Peel Hunt described the bid as an "excellent price for the bidding company", compared to its target price of 120p.

"We expect this modest valuation to leave the door ajar for speculation on the potential for a competing approach," they said.

New York-based CD&R said it viewed Huntsworth's underlying markets in the US and Europe as "attractive and underpinned by long-term, stable pharma-related trends". It added that it planned to help the healthcare firms pursue future acquisitions.

Huntsworth chairman David Lowden said: "Whilst we believe that Huntsworth is strongly positioned as an independent listed company, the all-cash offer from CD&R represents a compelling opportunity for shareholders to realise an attractive cash value in respect of their shares."

He added: "In addition, the board believes CD&R will be an excellent partner for Huntsworth, its employees and customers."

It came as Huntsworth reported a 27 per cent rise in pre-tax profit to £39.1m in the full year.

This was driven by a return to growth in its communications division, which includes London PR firms Quiller, Citigate Dewe Rogerson and Red Consultancy. The group's medical arm also performed well, as like-forlike revenue grew nine per cent.

"Healthcare remains our focus for growth and investment, as it continues to be a fast-growing sector led by increasing global demand for new drugs to help ageing populations," said Huntsworth boss Paul Taaffe.

The deal would be the latest major acquisition by a US private equity firm in Britain as investors capitalise on a drop in the value of the pound.

Buyout firm Advent earlier this year completed its £4bn takeover of defence giant Cobham, while Blackstone has agreed to buy Legoland owner Merlin for £6bn.

(c) 2020 City A.M., source Newspaper