NMC Health said yesterday that it would not give up on its pursuit of a tie-up with Al Noor Hospitals, even after the Abu Dhabi-based firm agreed merger terms with Johannesburg-listed Mediclinic.
In a deal recommended by the boards of both companies, Mediclinic, which has healthcare facilities in South Africa, Switzerland and the UAE as well as in the United Kingdom through Spire Healthcare, would own 84 to 93 per cent of Al Noor, depending on take-up by existing shareholders of Al Noor.
After the merger, London-listed Al Noor would be relisted as Mediclinic International, and the Al Noor clinics and hospitals would retain their original names.
The merged company would have a premium listing on the London Stock Exchange, besides a secondary listing on the Johannesburg Stock Exchange and, possibly, the Namibian Stock Exchange.
The deal, which is subject to certain conditions being met, has the “irrevocable” backing of Al Noor’s major shareholders Sheikh Mohammed bin Butti Al Hamed and Dr Kassem Alom, who together account for 34.3 per cent of the company.
Last week, London-listed NMC had made a counter-offer to Al Noor. “The board took a look at the proposal [of NMC] and it was inferior to the offer from Mediclinic,” said Ronald Lavater, the chief executive of Al Noor, during an analyst call yesterday.
“We did an assessment and it was inferior on value, and the deal certainty.”
However, in a statement yesterday, NMC said that its offer was competitive and “the combination of NMC and Al Noor has the strongest strategic and financial rationale for all stakeholders”. The company said: “We reiterate our commitment to this opportunity despite the lack of meaningful engagement from the board of Al Noor”.
Andre Bekker, an analyst at Avior Capital Markets in Johannesburg, said that NMC “still believes that they have a strong case and are still willing to negotiate”.
He added: “Mediclinic has already spoken to competition authorities, they have gone through the process. So maybe they are a step ahead of NMC.”
International players such as Mediclinic and Singapore’s ParkwayHealth, regional providers such as Saudi German Hospital Group and local players such as NMC, Al Noor and Aster DM Healthcare have been growing their presence in the UAE, amid growing interest from private equity firms such as Al Masah Capital.
The likes of NMC and Al Noor have been expanding their network of clinics, hospitals, pharmacies and diagnostic facilities over the past couple of years.
“Given this growth and the competitive intensity, one way for leading providers to grow and increase market share would be through the acquisition or mergers route, especially when there are providers in the market with a similar focus on certain cities, patient populations or specialities,” said Ahmed Faiyaz, a healthcare analyst with the consultancy EY.
“And coming together would help ensure that the combined entity takes a stronger position within the evolving health sector.”
A merged Al Noor-Mediclinic group would be the third-largest private healthcare provider in South Africa, the largest in the UAE and the largest private medical network in Switzerland in terms of revenue. The pro-forma revenues of the merged group would have been US$4 billion for the financial period ending March 31.
Of these revenues, 46 per cent came from Switzerland, 31 per cent from South Africa and anothr 23 per cent from the UAE.
It would operate 73 hospitals with about 10,200 beds and 35 clinics, and employ 32,000 people.
Under the agreement, Mediclinic shareholders will receive 0.625 new Al Noor shares for each Mediclinic share held.
“An existing Al Noor shareholder who tenders the shares will receive cash of £11.60 per Al Noor share, which is a premium of approximately 39 per cent to the closing price of £8.35 per Al Noor share on October 1,” the companies said.
The share prices can be scaled back if more than 74.06 million Al Noor shares are tendered.
Two directors from the board of Al Noor will be on the board of the merged company, which will also include existing directors of Mediclinic. The chairman will be Edwin Hertzog, who is currently chairman of Mediclinic, while the chief executive would be Danie Meintjes, the chief executive of Mediclinic.
Al Noor shares closed at 1,162 pence, up 16.7 per cent, in London yesterday. Its shares first touched £10 on October 6 when Mediclinic confirmed news that talks were on about the merger.
NMC shares closed at 796 pence, down 1.5 per cent in London yesterday.
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