IHH Healthcare offers to buy Ramsay-Sime Darby JV for RM 5.7b
Singapore
MALAYSIAN hospital group IHH Healthcare is offering to buy Ramsay Sime Darby Health Care (RSDHC) for RM5.67 billion (S$1.83 billion) on a cash-free, debt-free basis, said a bourse filing on Tuesday (Mar 22).
The target company is a 50:50 joint venture between Australian multinational healthcare provider Ramsay Health Care and Malaysian trading conglomerate Sime Darby Holdings (SDH).
The healthcare business operates hospitals in Indonesia and Malaysia, a nursing college in Malaysia and a day surgery in Hong Kong.
IHH said it had submitted a confidential, conditional, non-binding, indicative proposal to Ramsay and SDH for the acquisition, noting that current discussions are preliminary and that no agreement has been reached yet.
In a separate bourse filing on the Australian Securities Exchange, Ramsay said that together with SDH, it had agreed to a period of exclusivity for 4 weeks when due diligence commences to allow IHH to conduct due diligence and negotiate a sale and purchase agreement.
DBS Group Research is positive on the proposed acquisition, as RSDHC and IHH have complementary portfolios and the deal could draw further synergies from a bigger and stronger cluster of hospitals.
The research team also noted that RSDHC's Malaysia hospitals are reputable and well-located, adding that the proposed acquisition would mark IHH's first foray into Indonesia and potentially drive medical tourism referrals to Malaysia and Singapore.
Hong Leong Investment Bank Research analyst Sophie Chua said IHH's acquisition is in line with its strategy to strengthen its presence in the Klang Valley area.
RSDHC has 4 medical centres in Klang Valley: Subang Jaya Medical Centre, Ara Damansara Medical Centre, ParkCity Medical Centre and Bukit Tinggi Medical Centre.
All are in urban areas and cater more to the premium segment, especially the ParkCity Medical Centre in Desa ParkCity.
"In terms of the transaction price, I think that it will be considered reasonable if the acquisition price is between 20 times and 30 times of the company's enterprise value to earnings before interest, taxes, depreciation and amortisation," Chua added.
RSDHC was set up in 2013 to hold Sime Darby and Ramsay's combined portfolio of hospitals in South-east Asia. According to Sime Darby's annual report, the unit posted a 11 per cent growth in revenue to RM1.06 billion for the financial year ended 2021.
In 2020, RSDHC was said to be planning an initial public offering (IPO) in Malaysia that could raise about US$300 million, said people with knowledge of the matter.
The company has since, however, decided to put its IPO plans on hold.
Shares of IHH, which is dual-listed in Singapore and Malaysia, closed flat at S$2.09 on the Singapore Exchange on Tuesday.
With additional reporting by Tan Ai Leng
