Australia's Healthscope agrees $3.17b Brookfield bid

Healthscope announced in a filing that it had accepted a scheme of arrangement under which Brookfield will pay A$2.50 per share for all shares of the company. Shareholders would be entitled to compensation in the form of either cash or shares in Brookfield's acquisition vehicle.

Including debt, the scheme implies an enterprise valuation for Healthscope of A$5.71 billion. It is not subject to financing or due diligence.

Brookfield will also launch an off-market takeover offer comprising $2.40 per share. The takeover offer is conditional upon the scheme of arrangement not being successful and Brookfield receiving acceptance from shareholders representing at least 50.1% of Healthscope’s total issued capital.

In related transactions, Medical Properties Trust (MPT) and NorthWest Healthcare Properties – real estate investment trusts listed in the US and Canada respectively – have agreed to purchase 11 freehold hospital properties each from Healthscope for around A$2.5 billion and lease them back to the company. The property deals are conditional on Brookfield taking control of Healthscope either through the scheme of arrangement or the takeover offer.

According to a separate filing the BGH consortium – which includes AustralianSuper, GIC Private, Ontario Teachers’ Pension Plan, and Canada Pension Plan Investment Board – has indicated it is willing to improve the terms of its offer of A$2.36 per share if it is granted access to due diligence. In response, Healthscope reiterated its recommendation of the Brookfield bid.

Healthscope’s stock opened at A$2.43 following the announcement on February 1, up from the previous day’s close of A$2.37. The February 1 closing price of A$2.45 represents its highest point since last May, when shares briefly climbed above A$2.50 in response to Brookfield and BGH’s original bids and then fell upon Healthscope’s rejection of both offers.

Healthscope has 43 hospitals across Australia and 24 pathology laboratories in New Zealand; it recently divested its Asia pathology assets, comprising 39 laboratories across Singapore, Malaysia, and Vietnam, to TPG Capital for A$279 million.

Revenue for the 2018 financial year reached A$2.3 billion, up from A$2.3 billion the year before. Over the same period, net profit fell from A$111 million to A$89 million and operating EBITDA dropped from A$393 million to A$376 million.

BGH has been pursuing Healthscope since last April, having launched its bid shortly before closing its debut fund at $2 billion. The LP base for the fund includes several other members of the consortium bidding on Healthscope. Ben Gray, the founder of BGH, previously privatized Healthscope and then relisted it while he was at TPG Capital.

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