Australia's Primary ups stake in target Symbion

SYDNEY, Aug 13 (Reuters) - Australian Health services provider Primary Health Care Ltd. (PRY.AX) increased its stake in bid target Symbion Health Ltd. (HSP.AX) to 17.8 percent on Monday, moving closer to the level that would trigger a full takeover.

Symbion has already accepted a A$2.9 billion ($2.4 billion) bid by a consortium led by rival hospital operator Healthscope Ltd. (HSP.AX).

Executives from both firms met investors in Asia on Monday to sell the deal and downplay suggestions Primary may either try to block the deal or try to swap its shareholding for some Symbion assets.

Primary raised its stake from 16.18 percent to 17.78 percent, according to a stock exchange filing on Monday. Primary cannot buy more than 19.9 percent without mounting a full takeover.

Sources close to the deal said Healthscope remained confident of winning enough support for its deal and said Primary chief Edmund Bateman would have to make a significantly higher offer to threaten the process.

"He can't force anyone to sell those assets. If he did come in with an offer for certain assets it would have to be an unbelievable offer so it did not affect the synergies of the Healthscope transaction," one source told Reuters.

"It may come down to a bit of a proxy battle. But they

(Symbion-Healthscope) are very confident where they sit at the moment."

The Australian Financial Review newspaper said on Monday Healthscope was considering an alternative asset sale deal which would only need 50 percent of shareholder approval instead of 75 percent under the current takeover.

OneSteel Ltd. OST.AX) and Smorgon Steel Group Ltd. <SSX.AX also revised their A$1 billion takeover plan last year to fend off opposition from rival BlueScope Steel Ltd (BSL.AX) which bought a 19.9 percent stake in Smorgon.

Primary, which made an earlier takeover bid for Symbion that was rejected, has declined to rule out any options.

Australia's competition watchdog is expected to rule on the deal on Wednesday after Healthscope offered to sell some medical testing assets to smooth regulatory approval.

Symbion will vote on the bid on Sept. 11. Institutional investors own about 80 percent of Symbion, sources said.

UBS is advising Symbion. Healthscope is being advised by Goldman Sachs JB Were.

($1=A$1.18)