Dallah Healthcare to buy majority stake in Kingdom Holdings’ Care Shield
Saudi Arabia’s Dallah Healthcare agreed terms to acquire a majority share in Kingdom Holding’s Care Shield Holding Company in return for shares in its own business and a cash sum.
Dallah Healthcare is buying a 54.65 per cent of Care Shield from Kingdom Holding for 300 million Saudi riyals (Dh292.8m), which it will pay for partly by swapping treasury shares, and partly in cash, according to filings made by both companies to the Tadawul stock exchange, where their shares trade.
Kingdom Investment and Development Company, a subsidiary of Kingdom Holdings, will receive shares equating to a 4.99 per cent stake in Dallah Healthcare, valued at 186m riyals (Dh182m).
The remaining 114m riyals will be settled in cash.
“This transaction is part of KIDC’s strategy of expanding and enhancing the value of its investments in the healthcare sector of the Kingdom of Saudi Arabia,” Kingdom Holdings said yesterday.
The two sides announced in September last year that they were in talks regarding a cash and share swap deal, and although terms have been agreed on, the transaction is still subject to approval from both companies’ shareholders and from regulators.
Either side has the right to walk away if these are not completed within six months.
Care Shield owns a number of subsidiaries including Medical Service Projects Company, which owns Riyadh’s Kingdom Hospital, Consulting Clinics Company and Modern Clinics Pharmacy Company.
Dallah Healthcare also revealed that it had agreed to buy a further 4.08 per cent in Care Shield for 22 million riyals from shareholders Abdulrahman Bin Ibrahim Abu Hemid and Sons for Trade and Investment and from Adel AlMandeel, which will bring its total stake in the company to 58.64 per cent.
Dallah Healthcare operates the Dallah Hospital in Riyadh and a pharmacy distribution business.
The company made a net profit of 146.9m riyals in 2019 on revenue of 1.25 billion riyals.
Dallah Healthcare said the deal was part of its “expansion plan to support its market standing in providing premium medical service, which is in line with its strategic objectives”.
Saudi Arabia has introduced a number of policy reforms, including allowing 100 per cent foreign ownership of companies in the market, to attract greater private sector investment into its healthcare sector.
Last September, real estate consultancy Colliers forecast that the kingdom will need between 29,000 and 47,000 additional beds to meet demand as its population grows, which will require between $16.2bn to $21.1bn (Dh59.5bn to Dh77.5bn) of investment.
“We expect most of the investment to come from the private sector, privatisation through public-private partnerships and the creation of more [real estate investment trust] funds,” said Mansoor Ahmed, director of health care, education and PPPs at Colliers.
Dallah Healthcare’s shares were trading up 1.3 per cent by 1pm UAE time yesterday, while Kingdom Holding’s shares edged up 0.3 per cent.