Australia's Healthscope rejects PE takeover bids

In a statement, Healthscope said its board of directors had determined that both offers undervalued the company, failing to take into account potential for improvement in operating performance and returns from Healthscope's investment portfolio, as well as the value of its underlying property portfolio.

In addition, both proposals required extensive due diligence that the company was reluctant to provide during the opening of a new hospital and would have imposed restrictions on Healthscope's operations while the deals were under consideration. Healthscope will instead explore raising capital by selling select hospital properties.

Healthscope's stock price dropped more than 5% following the rejection of the takeover offers on May 21, opening the following day at A$2.33. The stock rallied on May 22, rising as high as A$2.42 before dropping again. In early afternoon trading on May 23 the stock was trading around A$2.34.

The BGH consortium announced its offer of A$2.36 per share in April; the investors included AustralianSuper, GIC Private, Ontario Teachers' Pension Plan (OTPP) and Canada Pension Plan Investment Board. Brookfield's bid of A$2.50 per share arrived the following month.

BGH's offer would have represented the first investment by the firm, which was set up in 2017 by Ben Gray. Gray was an executive at TPG Capital when it acquired Healthscope in 2010 for A$1.99 billion alongside The Carlyle Group. Both TPG and Carlyle exited the company in 2015 following an IPO the previous year that valued it at A$3.83 billion. BGH recently closed its debut Australia and New Zealand-focused fund at the hard cap of around A$2.6 billion.

Healthscope operates 45 hospitals across Australia and 63 pathology laboratories in New Zealand, Malaysia, Singapore and Vietnam. According to its most recent annual report, for the 12 months ended June 2017 the company recorded A$2.3 billion in revenue, up from A$2.2 billion the previous year, while net profit fell from A$181 million to A$111 million over the same period.

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• Topics
• Australasia
• Healthcare
• Buyouts
• Australia
• BGH Capital
• CPPIB
• OTPP
• GIC Private
• Brookfield Asset Management