PEP to buy Australia's LifeHealthcare

The private equity firm will pay A$3.75 per share in cash through a scheme of implementation. The agreement includes the payment of an interim dividend and a special dividend. The offer represents a 46% premium to LifeHealthcare’s February 2 closing price. Having been suspended from trading on February 5, the stock climbed more than 41% during the morning of the following day to reach A$3.63.

“PEP's proposal represents a significant premium to LifeHealthcare’s recent share price, is 100% cash consideration and allows for LifeHealthcare to pay a fully franked special dividend should the board elect to do so. For these reasons, the board considers PEP’s offer to be very attractive to shareholders,” Bill Best, the company’s chairman, said in a statement.

LifeHealthcare was formed in 2006 by Crescent Capital Partners through the aggregation of a number of smaller medical device manufacturers. It listed in 2013, raising A$76.6 million in its IPO and enabling the private equity firm to make a full exit. Co-investor Macquarie Funds Group exited at the same time.

The company produces devices used across a wide range of medical areas, from the treatment of wounds and burns to cardiology, neurosurgery, and orthopedics. It generated A$126.7 million in revenue for the 2017 financial year, up from A$114.8 million in 2016. Over the same period, EBITDA rose 3% to A$19.7 million while net profit fell 5.5% to A$7.1 million.

LifeHealthcare noted in its 2017 results presentation that demand for healthcare services in Australia and New Zealand remains strong, driven by an aging population, rising rates of chronic disease, and emerging technology. Recent strategic priorities include the development of synthetic biologics products, channel optimization and the integration of Oceania Orthopedics, which was acquired last year, and improving organizational efficiency and effectiveness.

Australia and New Zealand have seen a string of private equity deals in the healthcare space over the past 12 months. They include PEP’s purchase of iNova Pharmaceuticals for $930 million. The GP teamed up with The Carlyle Group on the transaction, recognizing the need for an international partner given iNova’s global footprint.

The LifeHealthcare agreement comes a week after Permira secured its first investment in Australia with the acquisition of I-Med Radiology Network from EQT Partners. Crescent also remains active in the space, having bought clinical research organization Nucleus Network in January.

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• Topics
• Australasia
• Buyouts
• Healthcare
• Australia
• Pacific Equity Partners
• New Zealand