Healthscope Ltd, Australia’s second-largest private hospital operator, said yesterday its board has unanimously recommended an A$2 billion (US$1.72 billion) takeover offer from US private equity firms Carlyle Group and TPG Capital.
Carlyle and TPG have offered A$6.26 a share for Healthscope, which the Melbourne-based company said represents a 39 percent premium to its A$4.50 share price on May 13 — the day before the company said it had received a proposal.
Based on the company’s 317 million shares outstanding, the purchase price would total about A$1.98 billion. Including debt, the company values the deal at A$2.7 billion.
Healthscope said the offer price would be reduced by any future dividends it pays to shareholders before the deal is complete.
“Whilst the board is of the strong belief that the company is well positioned to continue to deliver strong growth for shareholders into the future, the board determined that the relative certainty delivered by this cash offer at a substantial premium was in the best interests of Healthscope shareholders,” Healthscope chairman Linda Nicholls said in a statement.
The deal still requires Healthscope shareholder, court and other regulatory approvals.
Healthscope operates 44 private hospitals and has pathology facilities in Australia, New Zealand, Singapore and Malaysia.
The agreement ends a bidding process that had included multiple companies.
Healthscope said May 14 that a private-equity consortium had offered A$5.50 per share for the company, and days later that bid was upped to A$5.75 per share. By the end of May, Healthscope had received two additional offers, each totaling A$5.80 per share.
Media reports have identified one of the offers as having been from US private equity firm Kohlberg Kravis Roberts & Co. US hospital operator Tenet Healthcare Corp in June dropped out of the bidding after it said information about its discussions with Healthscope was made public prematurely and caused its share price to tumble.
Healthscope shares surged to the highest in three years after the announcement ended two months of speculation on details of the buyout, which would be the largest in Australia since 2002. The purchase will give the private-equity group a company whose cash from operations has increased fivefold in as many years.
Healthscope gained 10 percent to close at A$5.94, the highest since May 14, 2007. The stock has advanced 17 percent this year.
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