Canadians closing in on Healthscope
THE battle for Australia’s second-biggest private hospital group appears to be entering the final stage, with Healthscope opening its books to Canadian suitor Brookfield Capital Partners.
Healthscope has given Brookfield exclusive rights to scrutinise its accounts after the private equity group lobbed a sweetened $4.5 billion takeover offer.
It also throws up a fresh hurdle to a rival bidder – a consortium led by private equity house BGH Capital and superannuation titan AustralianSuper.
The consortium’s advances had been batted away as undervaluing the healthcare group, which operates more than 40 private hospitals.
Shares in Healthscope surged more than 14 per cent yesterday.
Brookfield is offering $2.585 for each Healthscope share through a scheme of arrangement that values the company at $4.5 billion.
In case that approach fails, the Canadian asset manager has also lobbed an off-market takeover offer, where it will pay $2.45 a share provided it secures a stake of at least 50.1 per cent.
Both offers include Healthscope paying a 3.5c interim dividend during the takeover process.
A takeover structured as a scheme of arrangement only needs 75 per cent shareholder support to secure the bidder 100 per cent of the shares in the target company.
Under an off-market takeover, Brookfield would need to get 90 per cent of the stock before it could compulsorily acquire the remaining shares.
Complicating Brookfield’s scheme of arrangement approach is that AustralianSuper, part of the rival bidding consortium, owns 19.1 per cent of Healthscope’s shares.
Ellerston Capital, which has a 9.4 per cent stake in Healthscope, is also part of the rival bidding consortium.
AustralianSuper has previously said it will not consider any rival offers, even if they are superior, because it wants to keep an ownership stake in Healthscope.
Brookfield’s scheme of arrangement offer allows Healthscope shareholders to receive shares in an unlisted company that will own the hospital group following any transaction.
AustralianSuper declined to comment yesterday.
Healthscope chair Paula Dwyer said the Brookfield proposal was “attractive” for shareholders.
“It is superior to the BGHAustralianSuper proposal and provides enhanced certainty,” Ms Dwyer said.
“It also offers more options for Healthscope shareholders, including an option to retain an equity exposure to an unlisted Healthscope.”
Healthscope runs 43 hospitals in Australia and 24 pathology laboratories in New Zealand.
The Melbourne-based company operates 15 hospitals in Victoria, including John Fawkner Private Hospital, Northpark Private Hospital, Frankston Private Hospital and the Melbourne Private Hospital, which is within the Royal Melbourne Hospital.
The group, which employs 18,000 workers, generated $2.3 billion in revenue for the year to June but reported a 50 per cent drop in profit to $75.8 million.
Listed private hospital operators have been sold down by investors over the past 18 months as people shun private health insurance over affordability and value concerns.
Healthscope was put into play in April when BGH-AustralianSuper launched a $4.1 billion takeover offer priced at $2.36 a share. Brookfield trumped that bid in May with an offer of $2.50 a share.
Healthscope rejected both deals, arguing they undervalued the business.
BGH and AustralianSuper relaunched their offer late last month, and it was again rejected by Healthscope.
The move by Healthscope to open its books to Brookfield came as Navitas, which provides English-language and other courses, rejected a takeover bid from a consortium also led by BGH Capital and involving AustralianSuper.
Navitas said the offer, worth almost $2 billion, undervalued the company and its board was exploring potential dealswith other parties.
IT IS SUPERIOR TO THE BGH-AUSTRALIANSUPER PROPOSAL AND PROVIDES ENHANCED CERTAINTY