Merger talks between Care Hospitals, Aster DM in advanced stage

Private equity firm Blackstone, which owns Care Hospitals, is making significant progress toward a reverse merger with Aster DM Healthcare Limited, led by Dr Azad Moopen. This merger, which will see Care Hospitals listed on stock exchanges, is set to reshape the healthcare landscape in India.

Merger details:

• Due diligence and documentation: Care Hospitals is in the advanced stages of completing due diligence on Aster DM. Documentation for a shareholders’ agreement is anticipated to begin shortly.
• Ownership and valuation: Blackstone acquired a 73 percent stake in Care Hospitals for Rs 6,600 crore, with TPG holding the remaining stake. Additionally, Care Hospitals acquired approximately 80 percent of KIMS Health at a valuation of Rs 3,300-3,400 crore.
• Management and control: Post-merger, Dr Moopen will continue as chairman of the board, with other executive positions, including CEO and CFO, filled by nominees from Blackstone, Care shareholders, and the Moopen family. Both parties will have joint control and special rights over strategic and operational matters.
• Share swap and exit routes: The share swap ratio for the merger has yet to be finalized, providing potential exit routes for Care Hospitals’ shareholders.

Important information:

• Stock market Impact: As of September 17, Aster DM’s market capitalization was Rs 20,649 crore. The merger will impact the stake of Dr Moopen and his family, who currently hold 41.88 percent of Aster DM. The family’s holding will be diluted but they will retain a significant share.
• Hospital chain rankings: Post-merger, the combined entity will rank among India’s top three hospital chains by bed count. Apollo Hospitals, with over 10,000 beds, and Manipal Hospitals, with around 9,500 beds, are the other major players.
• Aster DM’s recent restructuring: In April, Aster DM completed a separation of its India and GCC businesses, with a consortium led by Fajr Capital acquiring a 65 percent stake in Aster GCC. The Moopen family retained a 35 percent stake in the GCC business.
• Dividend announcement: Following the GCC business sale, Aster DM’s board announced a special dividend of Rs 118 per share, distributing about 80 percent of the sale proceeds to shareholders.

Legacy and market position:
The merger will significantly impact the healthcare sector by consolidating resources and expanding reach. The integration of Aster DM and Care Hospitals will create a formidable entity, contributing to improved healthcare services and enhanced market competitiveness.

Stock update:
As of the latest trading session, Aster DM’s stock was priced at Rs 409.35 on the National Stock Exchange, reflecting a slight decrease of one percent from the previous close.

This strategic merger is poised to reshape the hospital industry, offering enhanced capabilities and broader market reach. Pune.News