Brookfield nears $3.16b bid for Australia's Healthscope

Healthscope entered into exclusive negotiations with Brookfield in November, having rejected a bid of A$2.50 per share in May. Following the completion of the bulk of its due diligence, Brookfield "has no reason to believe it would not be willing" to enter into a scheme of arrangement representing A$2.585 per share or a takeover offer at A$2.455 per share, including a dividend payment of up to A$0.035 per share, according to a filing.

Healthscope's stock jumped 5.8% on December 21 in response to the announcement, closing at A$2.18. It reached a 19-month high of A$2.48 in early May on the back of the initial bids from BGH and Brookfield, fell back after those bids were rejected, and then rebounded to A$2.32 in November once Brookfield entered exclusivity.

The two parties have agreed to extend the exclusivity provisions to January 18. Meanwhile, BGH – which is leading a consortium that includes AustralianSuper, GIC Private, Ontario Teachers' Pension Plan, and Canada Pension Plan Investment Board – has informed Healthscope that it is willing to commence due diligence immediately regarding an offer made in October of A$2.36 per share.

The consortium's offer was unchanged from the one submitted in April that was turned down by the Healthscope board alongside Brookfield's initial bid. However, in the interim, BGH and its partners increased their combined holding in Healthscope from 14.5% to 17.3%, most of which is held by AustralianSuper. Since then, the consortium has raised its interest to 19.3%, while Ellerston Capital, which owns 9.89%, has indicated it would support the bid.

Healthscope has 43 hospitals across Australia and 24 pathology laboratories in New Zealand. Revenue reached A$2.34 billion for the 2018 financial year, up from A$2.26 billion for the previous 12 months. Over the same period, operating EBITDA fell 4.4% year-on-year to A$375.9 million, while net profit dropped 49.9% to A$75.8 million.

BGH was established last year by Ben Gray, formerly co-head of Asia at TPG Capital, and closed its debut Australia and New Zealand-focused fund in May at A$2.6 billion. Gray led TPG's A$2 billion take-private of Healthscope in 2010 in conjunction with The Carlyle Group. They exited the company in 2015 following an IPO the previous year at a valuation of A$3.8 billion.

AustralianSuper is an LP in BGH's fund and this is not the only situation in which the two parties have teamed up to make a privatization offer for a company in which the superannuation fund is also a public market shareholder. A BGH-led consortium made a A$1.97 billion bid for education services provider Navitas in October, but it was rejected the following month.

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• Topics
• Australasia
• Healthcare
• Buyouts
• Australia
• Brookfield Asset Management
• BGH Capital
• AustralianSuper