BGH resumes its pursuit of Australia's Healthscope

Healthscope said in a filing that the BGH consortium had returned with a proposal that was “substantially the same” as its initial offer in April although the consortium was now claiming that fellow existing shareholder Ellerston Capital would support the new bid.

The consortium, which includes AustralianSuper, GIC Private, Ontario Teachers’ Pension Plan, and Canada Pension Plan Investment Board, has offered A$2.36 per share in both of its bids. This compares to an offer of A$2.50 submitted by Brookfield Asset Management in May that valued the company at about A$4.3 billion.

Healthscope confirmed that it had rejected both the initial BGH consortium bid and the Brookfield bid in May, saying they undervalued the company and citing a number of factors including inconvenient timing of the due diligence process. The company’s share price has oscillated sharply during these developments.

The stock jumped 20% following the BGH consortium’s latest offer to as high as A$2.15 and was trading at A$2.11 as of early afternoon October 26. Investor interest following the consortium and Brookfield bids had lifted shares to as high as A$2.58 apiece in May. The stock has traded as low as A$1.78 this month.

The latest bid coincides with incremental share acquisitions by consortium members that have increased their combined holding in Healthscope from 14.5% to 17.1%, most of which is held by AustralianSuper. This holding comprises a directly-owned position of 15.6% and 1.5% through an equity swap.

Ellerston has a 9.4% interest in the company. Ellerston’s role in the new take-private proposal has not been clarified and Healthscope stated that it has not received any relevant correspondence from the firm.

The proposed deal would be the first investment for BGH, which was set up by Ben Gray in 2017. Gray was an executive at TPG Capital when it acquired Healthscope in 2010 for about A$2 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$3.8 billion. BGH closed its debut Australasia fund at A$2.6 billion in May.

Healthscope operates 45 hospitals across Australia and 63 pathology laboratories in New Zealand, Malaysia, Singapore and Vietnam. The company employs more than 17,000 doctors and 18,000 other employees. Revenue improved 4.5% during financial 2017 to A$2.3 billion, while 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
• GIC Private
• AustralianSuper
• OTPP
• CPPIB