Wesfarmers is understood to be in the process of hiring staff for a new healthcare fund and some of the recruits targeted have many wondering about its next big takeover target.
The understanding is that among those being considered and hired for roles are top executives in the health insurance space, prompting some to ponder whether the Perth-based conglomerate could have a group such as Medibank Private, NIB or another international health insurance business in its sights.
A couple of recruits for the healthcare division are understood to have already been signed up.
Insurance is not new to Wesfarmers – it sold its underwriting business to IAG in 2013 for close to $1.9bn.
While some believe it would be odd for it to re-enter the space after staging an exit, one attraction could be capitalising on consumer data it collects through the Flybuys customer loyalty program to provide more attractive health insurance offers to consumers.
In September, Wesfarmers managing director Rob Scott said the company planned to create a separate healthcare division from a potential acquisition of Priceline owner API, using it as a “platform from which to invest and develop capabilities in the growing health, wellbeing and beauty sector”.
Wesfarmers has looked at various healthcare assets in the past, including the country’s largest cancer care provider Icon Group that sold to private equity firm EQT for $2.4bn.
Several years ago it looked in detail at aged care operators, although it is thought to have gone cold on the prospect of owning such businesses because of their regulatory risk brought about after a royal commission into the industry.
The $60bn Wesfarmers that owns Kmart, Target, Officeworks and Bunnings is known to be keen on private hospitals, although some doubt an attempted acquisition of the country’s largest operator Ramsay Health Care will be on the agenda.
It once weighed up an acquisition of the nation’s second-largest hospital operator Healthscope, which was bought by Brookfield in 2019 in an
on-market contest with BGH Capital for $4.4bn.
Wesfarmers had been in a battle to buy API last year with Woolworths, although the supermarket chain waved the white flag this month following a $827m bid, which paves the way for Wesfarmers to succeed with its $763m approach.
Wesfarmers offered $1.55 per share, and while Woolworths put forward a $1.75 per share bid, its challenge was that Wesfarmers already owned a 19.3 per cent interest in the operation.
After due diligence, Woolworths determined that it could not make the numbers work. The logic for the API deal is set to be the opportunities created through its existing online and
in-store retail channels.
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