German hospitals group Sana says large takeovers possible in future

Fri Mar 21, 2014 2:00am EDT

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FRANKFURT, March 21 (Reuters) - Sana Kliniken AG, the third-largest private-sector hospitals operator in Germany, has trained its sights on major rivals as potential takeover targets in the long term to keep up with industry leader Fresenius .

Its peers Asklepios and Rhoen-Klinikum could become merger partners at some point as they are under pressure from Fresenius and its Helios hospitals unit, unlisted company Sana's finance chief Thomas Lemke told Reuters.

"There are many reasons that prompt rational people to think about it," Lemke said when asked whether the company had any interest in Rhoen and Asklepios in the longer term.

There are no talks or plans for a concrete tie-up, he said, stressing that the owners would have to be willing to sell.

Diversified healthcare group Fresenius has been scooping up hospital chains, starting in 2005 with the purchase of Helios Kliniken GmbH.

Having bagged smaller hospitals operator Damp Group for 560 million euros ($769 million) in 2012, Fresenius last month completed the purchase of most of Rhoen-Klinikum's hospitals for 3 billion euros, cementing its No.1 position in the market.

"The size of the combined group will put more pressure on all other hospitals to improve efficiency," Sana's Lemke said.

Sana, owned by 31 medical insurance groups including units of Allianz and Munich Re, has no shortage of financial backing.

Private operators in Germany, which own about one in three hospitals, have grown by taking over underfunded public-sector hospitals from debt-laden German municipalities, upgrading their equipment and looking to run them more efficiently.

But many municipalities have recently fought to delay a sale as long as possible because of strong political opposition to hospital privatisations.

The owner of Asklepios, 70-year-old founder Bernard Broermann, is considering a stock market listing for Germany's second-largest private hospitals chain among other options, people familiar with the matter said last month.

A spokesman for Broermann said he had no short term or long term plans to sell the company.

As for Rhoen, which sold about two thirds of its assets to Fresenius, Lemke said that Sana would be interested in acquiring some of its remaining hospitals.

Rhoen would first have to fix organisational issues at its largest complex Giessen-Marburg, Germany's only privately owned university teaching hospital, before the group as a whole could become a partner in a tie-up, Lemke added.

There is also uncertainty linked to Rhoen's diversified ownership structure, he said.

A Rhoen spokesman was not immediately available for comment.

After the Rhoen deal, the hospitals unit of Fresenius will have annual sales of about 5.5 billion euros, compared with the 3 billion that No. 2 Asklepios posted in 2012.

Sana had 2 billion euros in sales last year while Rhoen is left with about 1 billion in revenues after the divestment. (Writing by Ludwig Burger; Editing by Anthony Barker)

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