Mediclinic acquires stake in UK private hospital group
A breakthrough into Europe
MEDICLINIC, the JSE-listed private hospital company, has bought a stake in Britain’s largest private hospital provider, Spire Healthcare Group, for £431.7 million (R8.32 billion).
The transaction, which would still be subject to the completion of the rights issue, would see Mediclinic holding a 29.9 percent stake in Spire Healthcare Group. The shareholding will be bought from funds managed by European private equity firm Cinven.
Mediclinic chief executive Dannie Meintjes described the deal as a breakthrough by the company into the competitive European private health-care industry. “We are investing in a growing developed market while also diversifying into an attractive new geography with a strong currency,” he said.
“Both Mediclinic and Spire Healthcare will benefit from collaboration through the sharing of knowledge and experience and improving cost synergies and efficiencies.”
Mediclinic owns hospitals in southern Africa, the United Arab Emirates and Switzerland, and is seeking to expand in countries where rising household incomes have led to growing demand for private health care.
The UK’s state-run National Health Service, the country’s biggest provider, is under pressure from private hospitals, which are attracting patients with shorter waiting times.
In terms of the deal, Mediclinic and investment holding company Remgro – Mediclinic’s biggest shareholder with a 41.4 percent stake in it – would acquire the stake, which will be funded through a R10bn rights issue.
Growth
Remgro, owned by billionaire Johann Rupert, said a further R1.4bn raised beyond the purchase amount would be used to pay advisers and support future growth opportunities. Remgro chief executive Jannie Durand said the deal would strengthen the two companies’ footprint in the UK.
“We are delighted to support Mediclinic in acquiring this holding in Spire Healthcare,” Durand said. “By joining forces we are able to act swiftly in the interest of both Remgro and Mediclinic shareholders.”
Mediclinic’s shares rose by 3.16 percent on the JSE to close at R102.80 yesterday.
“The Spire acquisition gives Mediclinic further currency diversification,” said Wayne McCurrie, a money manager at Momentum Wealth in Johannesburg, referring to pressure on South African companies from a weaker rand.
Spire’s shares also soared 10 percent, the most since Cinven led an initial public offering of the London-based company in July, and traded 8.7 percent higher in the morning in London. That values the company at £1.4bn.
“This is an exceptional opportunity for us to gain a strategic investor who understands our business and growth ambitions,” Spire chief executive Rob Roger said.
The company planned to “meet the significant capacity growth we expect of the UK private health-care sector in the medium to long term,” he said. – Additional reporting by Bloomberg