SYDNEY (Reuters) – Australian hospital operator Healthscope Ltd (HSO.AX) said it had received an increased takeover proposal from Brookfield Capital Partners valuing the company at up to $3.25 billion, and rejected a bid from Australian private equity firm BGH Capital.
Healthscope said it would grant Brookfield exclusive access to due diligence to facilitate a binding offer of up to A$4.5 billion ($3.3 billion).
After rebuffing both suitors in May, Chairman Paula Dwyer said Brookfield’s new proposal to acquire the company via either a voluntary scheme of arrangement or an off-market takeover, was superior to BGH Capital’s offer.
Healthscope shares rose 14.2 percent to A$2.37 in morning trading after the proposal was announced, while the broader market was slightly lower.
The Melbourne-based company’s falling profits and large hospital property portfolio have made it an attractive takeover target for suitors looking at Australia’s ageing population as a source of long-term growth.
Brookfield’s latest two-tiered offer values Healthscope at up to A$2.585 per share, slightly higher than its previous offer of A$2.50 per share.
“We consider the Brookfield proposal to be attractive for shareholders and provides enhanced certainty,” Dwyer said in a statement.
Healthscope would therefore not give due diligence access to BGH Capital and its partners, she said.
Last month, BGH and Healthscope’s biggest shareholder, AustralianSuper, lobbed their second and unchanged A$4.1 billion bid with the support of the company’s third-largest shareholder.
A 15 percent fall in the share price since Healthscope spurned its suitors in May probably prompted the company to change its tune and engage with Brookfield, Morningstar analyst Gareth James said.
“My guess would be that the Brookfield bid would win it,” James said. “I think if there were going to be any other bids other than these two they probably would’ve materialised by now.”
Brookfield’s proposal is conditional on Healthscope not completing the sale and leaseback of its hospital property portfolio, for which the hospital operator said it had received “strong interest”.
As part of its proposal, Brookfield is also offering shareholders the ability to remain invested in an unlisted Healthscope.
In August, Healthscope reported that its annual operating profit had halved and outlined plans to spin off, sell and lease back some of its hospital real estate.
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