On 21 December 2018, leading private healthcare provider Healthscope Limited (ASX: HSO) provided an update about the proposal from Brookfield Capital Partners Limited which was announced on 12 November 2018. In the announcement, Brookfield has confirmed that it has received all of the due diligence materials from Healthscope and now Healthscope is considering that all the due diligence enquiries related to the Healthscope business and management are substantially completed. Based on the due diligence enquiries, Brookfield has confirmed that it has no reason to not proceed with the proposal to acquire 100% shares of Healthscope through Scheme of arrangement. The Scheme of arrangement is representing the total value of $2.585 per share, and in case if it fails, a simultaneous scheme of arrangement representing the total value of $2.455 per share which includes an interim dividend of 3.5 cents per share payable in respect of the six months to 31 December 2018. Following the announcement, the share price of the company increased by 6.553% as on December 21, 2018.
Brookfield has proposed that part of the consideration under the takeover offer may be paid by way of dividend/or capital return; however, this would not reduce the total amount payable to shareholders. This approach will provide some taxation benefit to the Healthscope shareholders who can utilize any franking credits, and this aspect of the Brookfield proposal will be taken into consideration by the Healthscope board. Healthscope has reminded its shareholders that there is no certainty that the Brookfield proposal will result in the scheme of arrangement or takeover bid being formally proposed.
On 21 December 2018 Healthscope Limited also announced that it has received correspondence from BGH Capital Pty Ltd on behalf of the consortium of financial investors comprising the BGH-AustralianSuper Consortium. The Consortium has informed that it is able to begin its due diligence immediately with regards to its revised preliminary, non-binding proposal to acquire 100% of issued and to be issued shares in Healthscope for $2.36 per share.
In FY 2018, the company’s revenue increased by 3.7 percent to $2.3 billion as compared to FY 2017. However, the Group Operating EBITDA of the company decreased by 4.4 percent to $375.9 million in FY 2018 as compared to 2017. In the first quarter of FY19, the Hospital Operating EBITDA growth was 10.4% as compared to the decline in Hospital Operating EBITDA of 6.8% in the corresponding prior period. The company is expecting its FY19 Hospital Operating EBITDA to grow by at least 10% as compared to FY 2018. Earlier on 9 November 2018, BGH Capital Healthcare Pty Ltd, a wholly owned subsidiary of BGH ended it 2.71% interest in Healthscope shares under an Equity Swap.
In the last six months, the share price HSO decreased by 9.25 percent as on 20 December 2018 and traded at a PE ratio of 39.620x. HSO shares traded at $2.195 with a market capitalization of circa $3.59 billion as on 21 December 2018.
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