SYDNEY (Reuters) – Private equity firm Carlyle may pull out of a consortium expected to bid around $1.5 bilion for Australia’s second-largest hospital owner Healthscope (HSP.AX), two sources familiar with the deal said Thursday.
Carlyle was expected to make a final decision on whether to proceed before final bids were due on Friday, they said, confirming media reports.
Carlyle is part of a consortium including TPG [TPG.UL] and Blackstone Group LP (BX.N) looking at Healthscope. Even if Carlyle pulls out, the other members fo the group were still expected to proceed, the sources said.
“The bank group will still go on without [Carlyle]”, said one of the sources, a senior banker backing the consortium.
Buyout firm Kohlberg Kravis Roberts & Co [KKR.UL] has also made an approach and is expected to bid alone although it was earlier in talks with CVC Asia-Pacific about a joint bid.
There have been concerns among potenial bidders about the debt market and government moves to deregulate the pathology industry were weighing on the sale efforts, but both the KKR and TPG groups were still expected to lodge bids by Friday.
The Australian newspaper said a final decision would be made in concert with local Caryle executives and the firm’s U.S.-based partners in the next 24 hours.
“The next 24 hours, we will see what happens. All of the PE guys, particularly Caryle are very disciplined,” one the sources told Reuters.
U.S.-based Tenet Healthcare Corp THC.NL also made an approach but later dropped out.
KKR approached Healthscope in May with a cash offer of A$5.80 a share, valuing the company at A$1.84 billion, topping TPG’s offer of A$5.75 a share. A successful sale would be the largest private equity takeover in Australia since 2008.
Officials for the TPG consortium and Healthscope declined to comment, while officials at Caryle were not immediately available to comment.
Healthscope is Australia’s second-largest hospital owner with 43 hospitals representing 15 percent of the private hospital market. It also has the country’s third-largest pathology business.
KKR is being advised by Morgan Stanley.
Macquarie MQG.AX) and Credit Suisse <CSGN.VX are advising the TPG and Carlyle consortium, while Blackstone is being advised by UBS (UBSN.VX).
Healthscope is being advised by Goldman Sachs JBWere and Lazard.
The final bank group for the TPG consortium totals around 17 lenders after Bank of Scotland and National Australia Bank dropped out, the bank source said.
They include the three major lenders ANZ (ANZ.AX), Commonwealth Bank of Australia (CBA.AX) and Westpac Banking Corp (WBC.AX), as well as international lenders such as Bank of America Merrill Lynch (BAC.N), and Barclays Capital (BARC.L), plus others. (Additional reporting by Sharon Klyne; Editing by Ed Davies)
(Reporting by Michael Smith;)