This article is from the Australian Property Journal archive
CANADIAN giant Brookfield’s extended sizing up of hospital operator Healthscope has culminated in a takeover agreement that will see its 22 properties forwarded on to Medical Properties Trust and NorthWest for $2.5 billion.
Healthscope had weighed up the prospect of spinning off its hospitals into a new $1 billion unlisted property trust after rejecting takeover bids throughout last year from BGH-AustralianSuper Consortium of $4.11 billion, and from Brookfield initially of $4.35 billion.
Brookfield came back later in the year with muscled-up deal that knocked out its rival and prompted Healthscope to grant it exclusive due diligence, while Healthscope continued considering its property trust spin-off.
The agreed terms for the Brookfield deal announced on Friday include a $2.50 per share scheme consideration, including an interim dividend of 3.5 cents per share, and a takeover bid of $2.40 per share, which in total values Healthscope at $5.712 billion, with an equity value of $4.375 billion.
Healthscope’s board backed the deal, with the scheme consideration representing a near-40% premium to the group’s closing price in October 22 – its last before announcing Brookfield’s bid – and is not subject to financing or due diligence.
It has agreed to sell 11 properties to each of MPT and NorthWest and lease them back, conditional on the scheme becoming effective or control of Healthscope passing to Brookfield under the takeover offer.
“Brookfield is one of the largest builders of hospitals in Australia, and a long-term operator of and investor in service businesses globally. We are confident in the prospects for Healthscope to strengthen, grow, and continue to provide quality healthcare services to the community under our ownership,” Brookfield managing partner, Len Chersky said.
Healthscope had forecast double-digit earnings growth for the current financial year. On Friday, it also released unaudited interim results, which included group revenue growth of 3.0% to $1.2246 billion and on the prior corresponding period, and of 7.7% in operating EBITDA to $198.1 million.
Hospitals revenue growth was 3.0% to nearly $1.102 billion, and operating EBITDA 8.8% to $185.7million.
“Whilst FY18 was a year of transition for the Company, it is clear that in FY19 we have returned to earnings growth,” Gordon Ballantyne, Healthscope’s managing director and chief executive officer said.
“We opened Northern Beaches on time and on budget. As we anticipated, opening such a significant facility was not without its challenges but the hospital’s early performance has been very encouraging. Initial results from Northern Beaches indicate that the hospital is on track to generate a modest EBITDA contribution in FY19.”
UBS is acting as financial adviser and Herbert Smith Freehills as legal adviser to Healthscope for the Brookfield and property negotiations.
Australian Property Journal
