Primary to oppose Healthscope's Symbion bid: source

SYDNEY (Reuters) - Australia's Primary Health Care Ltd (PRY.AX) will vote against a A$2.9 billion ($2.4 billion) takeover of Symbion Health Ltd SYB.AX by rival Healthscope Ltd (HSP.AX), a source close to the situation said on Monday.

Primary is the largest shareholder in Symbion with 20 percent, although its stake alone is not enough to block the deal, which requires 75 percent acceptance.

Primary made its vote by proxy, and is able to change its mind if it attends a Symbion shareholder meeting on the board-approved bid on Tuesday.

Healthscope and Symbion both declined to comment on Monday.

Speculation has been swirling about Primary's intentions in recent weeks as it built up a 20 percent stake in Symbion. Primary said last week it might team up with private equity to bid for Symbion, and that no options had been ruled out.

Private hospital operator Healthscope made a cash and scrip offer for Symbion in May, under which its private equity partners, Archer Capital and Ironbridge Capital, would take Symbion's healthcare products business and pharmaceutical assets.

The battle for Symbion is fuelled by hot demand for Australian medical-testing assets, considered the jewel in the crown for consolidation in a healthcare sector buoyed by an ageing population.

Primary's 20 percent stake is the most it can hold without having to make a takeover offer under Australian corporate law. Symbion earlier this year rejected a A$2.3 billion offer from Primary, saying it did not believe Primary's estimates of synergies from a deal were realistic or achievable.

Symbion runs a network of more than 80 medical testing laboratories across Australia. It also runs medical centers and offers diagnostic imaging, consumer and pharmacy services.

Symbion shareholders will receive a combination of cash and new Healthscope shares with an implied value of between A$4.36 and A$4.56 per Symbion share.

Shares in Symbion closed down 1.6 percent on Monday at A$4.23 against a wider market down 1.4 percent. Healthscope shares gained 3.5 percent to A$5.85, while Primary fell 0.9 percent to A$12.05.

($1=A$1.21)