If there is one sector proving resilient when it comes to deal activity in the current COVID-19 environment it appears to be healthcare, and the sale process for Healthscope’s New Zealand pathology could be the latest proof.
Apparently, the two final suitors in the contest to buy the Healthscope New Zealand pathology division — NZ Super and Keppel Infrastructure — have put forward offers of more than $500m for the business.
It is understood that owner Brookfield is holding out for more — a price closer to $600m, according to sources.
Even so, a price over $500m for the 11 or so government contracts to provide pathology services is more than many have expected.
The operation has a $550m book value and has been the largest provider of COVID-19 testing for the New Zealand government.
An outcome on the JPMorgan-run sale is expected to be known next month.
A strong result will come after Healius also surprised the market by securing $500m for its medical centres from BGH Capital, even though many questioned the level of interest in the business heading into the Morgan Stanley and UBS-run sale campaign.
It is a situation being keenly watched by advisers, private equity firms and healthcare providers on this side of the Tasman that have hopes to offload assets.
A lack of current acquisition opportunities in the healthcare industry has been attributed to the strong results of late for the few offerings available.
This is at a time when the sector is considered defensive amid the global pandemic and one with strong earnings growth prospects due to an ageing population in Western nations.
Next off the block is anticipated to be Quadrant Private Equity’s radiology business Qscan, while the other deal that may still happen is an acquisition of the listed Healius by Partners Group. The pathology and radiology provider rebuffed Partners’ $2.1bn offer at the start of the year, but there has been speculation it will return with another proposal following the company’s sale of its medical centres division.
Brookfield purchased Healthscope — Australia’s second-largest health private hospital operator — for $4.4bn last year.
While pathology has been a good growth business for Healthscope, it is not necessarily its core market.
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