The private equity group of Brookfield Asset Management said it will invest up to US$1 billion ($1.3 billion) of equity to fund its proposed acquisition of Healthscope Ltd (ASX: HSO), a Melbourne, Australia-based private healthcare company.
The deal, expected to close in Q2 2019, represents an implied equity value of A$4.3 billion ($4.1 billion) and enterprise value of A$5.7 billion ($5.4 billion).
Brookfield said the transaction will also be funded with US$1.4 billion of long-term financing and US$1.7 billion from the sale and long-term leaseback of 22 freehold hospital properties.
As reported by Reuters, Healthscope recommended Brookfield’s offer after months of negotiations and counter bids from a rival group led by BGH Capital.
Brookfield Business Partners to Acquire Healthscope
BROOKFIELD NEWS, Jan. 31, 2019 (GLOBE NEWSWIRE) — Brookfield Business Partners L.P. (NYSE:BBU) (TSX:BBU.UN) (“Brookfield Business Partners”) together with institutional partners (collectively “Brookfield”), is pleased to announce that it has reached an agreement to acquire up to 100% of Healthscope Limited (ASX: HSO (“Healthscope” or the “Company”) for approximately $4.1 billion (AUD$5.7 billion). Healthscope is the second largest private hospital operator in Australia and the largest pathology services provider in New Zealand.
“Healthscope is a leading business offering best-in-class, essential services to the well-established and growing private healthcare sector in Australia and pathology services sector in New Zealand,” said Len Chersky, Managing Partner, Brookfield Business Partners. “As a long-term operator of and investor in service businesses globally, and one of the largest builders of hospitals in Australia, we are confident in the prospects for Healthscope to strengthen, grow, and continue to provide quality healthcare services to the community under our ownership.”
Healthscope operates 43 private hospitals across every state in Australia and owns 24 pathology laboratories across New Zealand. The Company provides doctors and patients with access to operating theaters, nursing staff, accommodations, and other clinical care and consumables.
Market leader in critical service sector. Healthscope is a leader in private healthcare services, as the second largest private hospital operator in Australia.
Essential social infrastructure. Private hospitals are essential assets that work in parallel with the public healthcare system to provide patients access to quality care.
Favorable industry dynamics. Healthscope is well-positioned to benefit from favorable demographic trends and a growing population driving demand for hospital services.
Track record of long-term stable growth. Healthscope has delivered continued growth in revenue and EBITDA for many years.
Substantial embedded growth. The business has several recently completed and ongoing developments, redevelopments and expansions which will support near and longer-term cash flow growth.
The transaction will be funded with up to $1.0 billion of equity, $1.4 billion of long-term financing and $1.7 billion from the sale and long-term leaseback of 22 wholly-owned freehold hospital properties.
Brookfield Business Partners expects to fund approximately one third of the equity, with the balance being funded by institutional partners. Prior to or following closing, a portion of Brookfield Business Partners’ commitment may be syndicated to other institutional investors.
Bank of America Merrill Lynch is acting as sole financial advisor to Brookfield. King & Wood Mallesons is acting as lead legal counsel to Brookfield. In addition, MinterEllisonRuddWatts is providing New Zealand legal advice.
Closing of the transaction remains subject to necessary shareholder and court approvals, as well as customary closing conditions including, among others, regulatory approvals. Closing is expected to occur in the second quarter of 2019.
Brookfield Business Partners is a business services and industrials company focused on owning and operating high-quality businesses that benefit from barriers to entry and/or low production costs. Brookfield Business Partners is listed on the New York and Toronto stock exchanges. Important information may be disseminated exclusively via the website; investors should consult the site to access this information.
Brookfield Business Partners is the flagship listed business services and industrials company of Brookfield Asset Management Inc. (NYSE: BAM)(TSX: BAM.A)(EURONEXT: BAMA), a leading global alternative asset manager with more than $330 billion of assets under management For more information, please visit our website at https://bbu.brookfield.com/.
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