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Rowsley shares surge after it inks deal for Thomson Medical Group
ROWSLEY shares surged 2.5 Singapore cents or 22.52 per cent to 13.6 Singapore cents on Monday after it inked a deal to acquire the Thomson Medical healthcare businesses from controlling shareholder Peter Lim for S$1.6 billion, to be paid mostly in stock.
If shareholders give their nod of approval, Rowsley will acquire the privately held Thomson Medical, which is a provider of healthcare services for women and children in Singapore, and a 70.36 per cent stake in Malaysia-listed TMC Life Sciences (TMCLS).
Rowsley will also be renamed Thomson Medical Group.
To foot the bill, Rowsley will issue Mr Lim 21.4 billion new shares at S$0.075 apiece. This will increase Rowsley's share base to 4.5 times what it is now, and raise Mr Lim's stake in the company from 45.36 per cent to 90.07 per cent.
Mr Lim has applied to the Securities Industry Council to waive the obligation to make a mandatory offer for Rowsley once the shares are issued. Rowsley said it is willing to undertake a placement to restore its free-float to the minimum 10 per cent level, if required.
Mr Lim will also offload some 597.3 million TMC warrants to Rowsley in exchange for about S$40.2 million in cash.
When the deal is expected to be completed next year, Rowsley said it would have a market cap of S$2.13 billion, larger than rival hospital player Raffles Medical Group.
Rowsley has a market cap of S$644.4 million now, after some 305.8 million shares changed hands on Monday, making it the top active counter.
If the deal proceeds as planned, Rowsley also proposes to give shareholders two bonus warrants for every one share they own, with an exercise price of nine Singapore cents.
For each bonus warrant exercised, shareholders will also get one more piggyback warrant that can be exercised at 12 Singapore cents.
In July, Rowsley had announced plans to spend up to S$1.9 billion to buy Mr Lim's healthcare assets and acquire one or more other medical practices. These other acquisitions did not pan out, it said on Monday.
After Mr Lim's asset injection, roughly two-thirds of Rowsley's revenue will come from healthcare, said Thomson Medical executive chairman Roy Quek.
In the 12 months ended Aug 31, Thomson Medical and Mr Lim's share of TMCLS raked in S$199.4 million in revenue, up from S$193.3 million in the same period a year earlier.
These assets generated a net profit of S$32.8 million in the 12 months to Aug 31, up from S$26.7 million in the year before.
A breakdown by company was not provided. Provenance Capital is the independent financial adviser and BDO Advisory is conducting an independent valuation of the target group. Shareholders will receive a circular before an extraordinary general meeting is convened in the first quarter next year.
Mr Lim bought Thomson Medical Centre for around S$513 million in 2010. TMCLS has a market cap of RM1.47 billion (S$485.4 million).
TMCLS owns the 200-bed Tropicana Medical Centre in Klang Valley, Kuala Lumpur, and plans to add 400 more beds at the end of 2020.
It also plans to complete Thomson Iskandar Medical Hub in Rowsley's Vantage Bay Healthcare City in 2021.