Canadian investment firm Brookfield Asset Management made a $3.3 billion approach for Australian hospital group Healthscope, trumping a local buyout proposal in addition to also also sending shares of the target up to a two-year high on Monday.
The approach, disclosed by Healthscope in a statement, sets the scene for a takeover battle for the No. 2 Australian private hospital operator which has seen its shares slide due to high debt in addition to also also a shift back to public health services after a scandal inside the private sector.
brand new Australian private-equity player BGH Capital, led by former executives of TPG Capital Management in addition to also also Macquarie, made an approach worth $3.1 billion on April 26. Pension fund AustralianSuper is usually partnering BGH in which proposal.
Healthscope shares rose 4.9 percent in a flat overall market by midsession. The stock was trading at A$2.59, its highest since April 2016, in addition to also also higher than Brookfield’s A$2.50 indicative bid, a sign investors expect a bidding war.
“The entry of Brookfield adds to bidding tension in addition to also also (I) expect the BGH-AustralianSuper consortium will most likely increase its offer bid,” said Chris Kallos, a healthcare analyst at Morningstar.
The deal could continue Brookfield’s rapid growth inside the entire world’s 12-largest economy. If Brookfield buys Healthscope, which could be the biggest takeover of an Australian company by a Canadian party since a consortium including Brookfield paid A$9 billion for rail in addition to also also ports giant Asciano in 2016.
Brookfield, BGH, in addition to also also AustralianSuper declined to comment.
Last week, Canadian landlord NorthWest Healthcare Properties REIT said which paid $312 million for a 10 percent stake in Healthscope. Northwest also declined to comment on Monday.
Healthscope, which listed in 2014, said inside the statement its board could assess both proposals in addition to also also update the market on any developments.
which added which Brookfield’s proposal came using a condition which effectively meant AustralianSuper was prevented by voting against its offer if the target accepted which. AustralianSuper already includes a 14 percent stake in Healthscope.
“Ultimately, the support of AustralianSuper is usually likely to determine the winning bidder,” said Danial Moradi, senior equities strategist at Lonsec Research.
“The structure of (Brookfield’s bid) implies which BGH will have to enhance their original bid,” he added in an email.
Brookfield is usually being represented by Bank of America Merrill Lynch for the potential transaction, according to Healthscope, while Healthscope has hired UBS.
Healthscope was a high-profile listing in 2014, with its shares rising steadily amid hopes which which could benefit by the country’s ageing population in addition to also also a heavily state-subsidised health system.
although investors started out selling the stock in 2016 after media reports accused private health insurers, which fund patients for companies like Healthscope, of withholding payouts to policyholders, prompting more patients to opt for the public system.
Healthscope, which had embarked on building a brand new hospital in Sydney’s north, issued two profit warnings, in addition to also also when BGH lobbed its takeover proposal last month Healthscope shares were trading below their IPO cost.