Healthscope selects Brookfield’s superior acquisition offer over BGH consortium

Brookfield defeats BGH-AustralianSuper Consortium in the battle of acquiring Healthscope Limited (ASX:HSO). The leading private healthcare provider, Healthscope announced today that it has entered into an implementation deed with Brookfield under which the latter will acquire 100% of shares in Healthscope at a value of $2.50 per share, and a simultaneous off-market takeover offer representing a total of $2.40 per share.

The news comes after the consortium of financial investors, BGH-AustralianSuper Consortium, expressed their intention to scale-up their previous offer of $2.36 per share provided Healthscope grants them access to due diligence. This correspondence was reportedly presented to the company by BGH Capital Pty Ltd on behalf of the consortium.

But before BGH-AustralianSuper Consortium could undertake the due diligence and propose a better offer, competitor Brookfield seized the acquisition deal with Healthscope.

Under the terms of the Scheme of Arrangement, Healthscope shareholders will be entitled to receive the total value of $2.50 per share, representing a premium of approximately 40% to the undisturbed closing price of Healthscope shares on 22 October 2018 of $1.785. The company further informed that Brookfield’s Transaction is subject to satisfaction of certain conditions but is not limited to due diligence and financing.

Healthscope's Chairman, Paula Dwyer, stated, “Healthscope has received several alternative proposals but its Board of Directors have unanimously concluded that the Brookfield offer is in the best interests of the company shareholders.”

Besides the premium of circa 40%, the offer price reflects an implied equity value of $4.375 billion and an enterprise value of $5.712 billion along with an implied acquisition multiple of c.14.7x EV / EBITDA.

Brookfield Managing Partner, Len Chersky, stated: “Healthscope is a leading business offering best-in-class, essential services to the well-established and growing private healthcare sector in Australia and the pathology services sector in New Zealand.” Len added that “the Brookfield is confident in the prospects for Healthscope to strengthen, grow, and continue to provide quality healthcare services to the community under its ownership.”

Healthscope has entered into agreements to sell 22 properties to Medical Properties Trust and NorthWest for circa $2.5 billion and lease them back, conditional on the Scheme becoming effective or control of Healthscope passing to Brookfield under the Takeover Offer. Of the 22 freehold properties that Healthscope has agreed to sell as part of the Brookfield Transaction, 11 will be acquired by MPT while NorthWest will acquire the remaining 11 hospitals, as per the report. Moreover, NorthWest has reportedly agreed to vote any shares which it acquires in Healthscope in favor of the Brookfield Transaction, subject to certain terms and conditions.

The company told that Herbert Smith Freehills is acting as a legal adviser and UBS as financial adviser to Healthscope with respect to Brookfield Transaction and the property transactions.

In today’s trading session, Healthscope shares are trading at the higher end. The stock price has surged up by 3.814% to trade at $2.450 by end of the trading session on 1 February 2019. HSO is currently trading at a PE of 45.380 x with a market capitalization of $4.11 billion. Over the past 12 months, the stock has massively gone up by 22.28%.

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