An AIM-listed social services group has proposed a £600m merger with one of its peers in a bid to create a FTSE-250 specialist healthcare provider.
Sky News has learnt that CareTech Holdings approached struggling Cambian Group with a 210p-a-share offer several weeks ago.
The bid is said to have been rejected by Cambian’s board, despite the fact that its shares are now languishing at less than 150p.
The 210p-a-share proposal is understood to have had the support of a number of Cambian’s institutional shareholders.
Some of those investors are now said to be agitating for the company’s chairman, Christopher Kemball, to step down.
It was unclear on Monday whether any further discussions had taken place between the two sides or whether any such talks were ongoing.
A tie-up between CareTech and Cambian would create a social care giant with nearly 450 properties across the UK.
CareTech supports adults and children with learning disabilities and provides a range of specialist services, while Cambian has a significant role delivering public sector contracts with local authorities in areas such as children’s behavioural health.
Cambian has struggled for several years, making a £9m pre-tax loss last year and suffering severe reputational damage after an undercover investigation into the level of services at one of its residential homes in Shropshire.
The company has described 2018 as “a year of consolidation and we will continue to invest in the systems and support for our staff necessary to deliver on our plans to return, in a measured fashion, to capacity-led growth”.
In its most recent results announcement last month, CareTech executive chairman Farouq Sheikh hinted at its approach to Cambian when he said:
“The Group has a number of consolidation opportunities under consideration.
“In addition, it has a strong pipeline of organic additional beds in reconfigured services and in new services.
“This will lead to a growth in capacity and revenues which will generate additional EBITDA and cash so the group can achieve its target of double digit growth in underlying diluted earnings per share in the medium term.”
CareTech and Cambian both declined to comment.