US Raider Acadia Plots Priory Takeover Bid

An American mental health specialist is plotting a takeover bid for the owner of the Priory, Britain's best-known rehab clinic, that would cost it well over £1bn.

Sky News has learnt that Acadia Healthcare is one of several parties which have approached Priory Group's owners about a potential deal in recent weeks.

Acadia and others have yet to table formal offers for Priory, which is the UK's biggest privately held provider of mental healthcare services.

Listed on Nasdaq, Acadia has a market value of approximately $5bn, and already has a big presence in the UK after it bought Partnerships in Care for more than £600m last year.

It subsequently added to its business here by acquiring the mental health division of Care UK in May.

Priory hinted this week that Advent International, which has owned the company since 2011, would consider takeover interest alongside its ongoing preparations for a stock market flotation.

“The Priory Group and its shareholders continue to assess a range of strategic alternatives, including a potential [initial public offering]”.

Announcing a strong set of quarterly results, Priory's chief executive, Tom Riall, said: "Demand for our services remains strong and we have a great platform on which to further grow our business.

"Our reputation for clinical excellence, best-in-class operations, and industry-leading facilities continues to strengthen and we believe these will drive increased opportunities for future growth over the coming years."

Priory has been unaffected by the storm which has hit many other residential care providers, which have complained that George Osborne's new National Living Wage will decimate their earnings and force them into potentially painful financial restructurings.

During the summer, five of the UK's largest care home operators - including HC-One and Four Seasons Health Care - wrote to Mr Osborne to warn that "without adequate funding to pay for the National Living Wage, the care sector is at serious risk of catastrophic collapse".

Best-known for treating celebrities for drink and drug addictions, its rehab clinics represent only a small part of Priory's business.

It operates approximately 300 facilities around the UK, treating about 30,000 patients annually for a range of problems including depression, stress and eating disorders.

Advent has hired four banks to work on a flotation of Priory, with Rothschild also advising the company's board on a potential sale.

The precise valuation of Priory Group is unclear, although earlier reports have suggested that it is likely to be well over £1bn.

Advent paid £925m to acquire Priory Group in 2011, since when NHS cutbacks in some areas have raised concerns about the viability of some privately owned healthcare providers.

The business had previously been owned by Royal Bank of Scotland, the state-backed lender.

A Priory spokesman declined to comment on Friday.