* Korian to offer 10 shares for every 11 Medica shares owned
* Deal creates group with combined sales of 2.2 bln eur
* New group eyes sales of 3 bln eur by 2017, savings of 15
* Shareholders to vote on merger in Q1 2014
* Medica shares gain 8.8 pct, Korian shares fall 5 pct
(Adds details from slides, updates shares)
By Dominique Vidalon
PARIS, Nov 18 French nursing home operator
Korian has agreed to buy rival Medica for
1.1 billion euros ($1.48 billion) in a deal that will create
Europe's largest elderly care group.
With an ageing European population, and public health care
systems under pressure due to the economic crisis, private
companies see opportunities to grow in the elderly care sector.
According to national statistics institute INSEE, the number
of people over 60 in France alone will reach 23.6 million by
2050, up from 15.6 million in 2012.
The deal, which the companies described as a friendly
merger, sees Medica shareholders receiving 10 Korian shares for
every 11 Medica shares owned. The deal represents a 15 percent
premium to Medica's closing share price of 20.03 euros on Nov.
The companies said in a joint statement the deal would
create a market leader better positioned to expand, more
powerful to seize growth opportunities, and more diversified to
respond to changing regulation in the industry.
The group would have leading positions in France, Germany,
and Belgium, and be number two in Italy, with close to 40,000
employees and 600 facilities, the companies said.
The merged group would overtake rival Orpea, which
until now was the French leader by revenue.
Shares in Medica rose as much as 8.8 percent to 21.80 euros
and were trading at 21.14 euros by 1203 GMT, valuing it at 101
million euros. Korian stock dropped around 2.7 percent to 24.64
euros, giving it a market capitalisation of 850 million euros.
"After years of rumours, a merger deal is happening between
two of the biggest players in the elderly care sector," Gilbert
Dupont analysts said in a note.
The deal will create a company with combined sales 2.2
billion euros ($2.96 billion), with 60 percent of revenue coming
from France, 20 percent from Germany, 8 percent in Begium and 2
percent in Italy.
The combined companies would target revenue of 3 billion
euros by 2017, stemming from mostly from organic growth but also
from acquisitions, with efficiency savings of 15 million in year
three after the merger.
Both companies said the deal would be submitted for approval
to shareholders of both companies in the first quarter of 2014.
Korian is being advised by JPMorgan, BNP Paribas, CACIB and
Bredin Prat, while Medica is being advised by Credit Suisse and
($1 = 0.7421 euros)
(Reporting by Dominique Vidalon; Editing by Louise Heavens)