Merrills Has A Merger Plan For Symbion And Primary

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By Rudi Filapek-Vandyck

Investors who believe that where’s smoke, there’s often also fire are likely to switch their attention to the healthcare sector today. Analysts at Merrill Lynch have taken the liberty to investigate a possible merger between Symbion Health (SYB) and Primary Healthcare (PRY) and the obvious question is: why would they do such a thing?

The answer, as far as we can derive from this morning’s report, is because they are such a good fit. And that’s an understatement as the analysts concluded “we cannot see why a merger between these companies should not provide an almost “perfect” strategic match for both companies.” There you have it. All that is required from now on is that company boards at both companies agree.

Merrill Lynch believes a merger between Symbion Health and Primary Healthcare could potentially increase EBIT by 13.3%, with pathology margins likely to increase from 15% to 19% for the combined company.

The broker sees strategic benefits stretching over the longer term and even gives a hint about how this plan should proceed from now on: “It seems to us that a “scrip” bid from SYB for PRY with board approval would be the most logical approach to the transaction.”

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