Healthscope backs $5.7bn Brookfield bid but BGH Capital remains the hunt
Brookfield has finalised a $5.7bn bid for private hospital operator Healthscope but rival bidder BGH hasn’t given up the hunt.
Canadian group Brookfield has finalised a $5.7 billion bid for private hospital operator group Healthscope but rival BGH Capital continues its fight to win the target.
Healthscope (HSO) announced today that its board had backed Brookfield’s bid, which is $2.50-a-share to acquire 100 per cent of the target, or $2.40-a-share to get a more than 50.1 per cent stake in the company.
Brookfield’s final offer for Healtscope is below the number it offered in November, which was $258.5-a-share for the scheme of arrangement and $245.5 for the 50.1 per cent takeover offer.
The company also revealed today that the BGH-led consortium — including Healthscope’s major shareholder AustralianSuper, which has a 20 per cent stake — has said it could improve the terms of its previous offer of $2.36-a-share, if it was given access to Healthscope’s data room.
“Having fully considered a range of alternatives, the board unanimously concluded that the Brookfield transaction is in the best interests of our shareholders,” Healthscope chairman Paula Dwyer said.
At 10.45am (AEDT), Healthscope shares were 3.17 per cent higher on the deal news, trading at $2.45.
Brookfield said the transaction would be funded with up to $1bn of equity, $1.4bn of long-term financing and $1.7bn from the sale and long-term leaseback of 22 wholly-owned freehold hospital properties.
The suitor said it expected to fund approximately one third of the equity, with the balance funded by institutional partners.
Brookfield said the finalisation of the deal, which was expected in the second quarter of 2019, was subject to shareholder and court approvals, plus regulatory approvals.
“Healthscope is a leading business offering best-in-class, essential services to the well-established and growing private healthcare sector in Australia and pathology services sector in New Zealand,” Len Chersky, managing partner of Brookfield Business Partners, said.
“As a long-term operator of and investor in service businesses globally, and one of the largest builders of hospitals in Australia, we are confident in the prospects for Healthscope to strengthen, grow, and continue to provide quality healthcare services to the community under our ownership.”
The deal is offered in two parts given AustralianSuper has previously said it would not back a rival bid for Healthscope given its involvement with BGH.
Healthscope said under the scheme of arrangement, its shareholders would receive $2.50-a-share, which included an interim dividend of 3.5c-a-share. The company said the offer was around a 40 per cent premium to its closing price on October 22, 2018, which was when BGH first made a move on Healthscope.
The company also today issued a market update, which said it reaffirmed its fiscal 2019 hospitals guidance. The company is targeting hospital operating earnings growth of at least 10 per cent compared to the previous year.
“While fiscal 2018 was a year of transition for the company, it is clear that in fiscal 2019 we have returned to earnings growth,” Healthscope chief executive Gordon Ballantyne said.
He added that initial results from its flagship Northern Beaches hospital, which has been plagued by issues since opening, showed that it was on track to generate a modest earnings contribution in fiscal 2019,
“As we anticipated, opening such a significant facility was not without its challenges but the hospitals early performance has been very encouraging,” Mr Ballantyne said.
