Medi-Clinic to buy Swiss hospitals for $2.36 bln

JOHANNESBURG (Reuters) - South Africa’s third-biggest hospital group, Medi-Clinic, has agreed to buy Switzerland’s largest private hospital group, Hirslanden Finanz, for 2.846 billion Swiss francs ($2.36 billion).

Medi Clinic said on Thursday it had arranged up to 2.8 billion Swiss francs in debt to fund the acquisition and would raise up to 4.5 billion rand ($631.6 million) in a rights offer of up to 198.7 million shares at 22.65 rand each.

Hirslanden is owned by private equity firm BC Partners, which bought it from UBS in 2002 for about 930 million francs.

“The Company has made a strategic decision to diversify geographically within its core business of acute, specialist orientated hospital care and to transform itself into a truly international hospital company,” Medi-Clinic said in a statement.

At 1357 GMT, Medi-Clinic was trading 4.04 percent weaker at 22.55 rand, retracing its previous day’s gain of 5 percent. The JSE mid-cap index was 0.18 percent lower.

An analyst, who wished not to be quoted, said Medi-Clinic had been looking offshore for opportunities over the past five years and the transaction looked fair, as it would be getting exposure to hospitals at the very high end of the market.

“The real question is how much is the deal costing the firm; it looks very good, but is very geared and very expensive,” the analyst added.

Hirslanden’s portfolio comprises 13 private acute-care facilities with 1,275 beds.

For the year to end-December 2006, Medi-Clinic said the hospital group reported gross revenue of $753.3 million and earnings before interest, tax, depreciation and amortization of $171.1 million.

Medi-Clinic said Stanlib Asset Management and RMB Asset Management had pert-underwritten the rights offer up to a value of 1.569 billion rand. It had agreements from other shareholders so that at least 85 percent of the offer would be taken up.

The firm recently acquired a controlling interest in Emirates Healthcare Holdings Limited -- the largest private hospital group in the emirate of Dubai.

Medi-Clinic said the effective date for the proposed acquisition would be on or before 31 October 2007.