A global bidding war is shaping up between some of the world’s largest private equity groups for Australia’s second-largest hospital owner.
At least three offers have been made on Healthscope, which operates 43 hospitals in Australia. The first offer was announced on May 14, when a private equity consortium consisting of the Blackstone Group LP, the Texas Pacific Group and the Carlyle Group submitted an offer of $5.75 a share ($1.74 billion Australian).
On Monday, two new bids were made, each for $5.85 a share ($1.84 billion Australian). One was made by Kohlberg Kravis Roberts & Co., while a second bid was unnamed but reported by Australian media to be from the U.S.-based Tenet Healthcare Corporation.
KKR is being advised by Morgan Stanley, while Tenet is being advised by Citigroup.
Tenet, based in Dallas, is the third largest hospital group in the United States, with annual revenues of approximately $10 billion. It consists of 49 hospitals in 11 states and 59 outpatient centers and employs more than 57,000 people.
Reuters has reported that the private equity firm CVC Asia-Pacific may join KKR’s bid. CVC owns I-MED, Australia’s largest private diagnostic imaging business, which it bought in 2006, and could integrate that with Healthscope’s in-hospital radiology business.
Healthscope officials have offered little comment on the bidding war, except to say it would allow the bidders to conduct due diligence.
“The board considers at this time the interests of shareholders will be best served by a formal process to thoroughly evaluate whether a change in control, at a price and on terms that the board would recommend, can be secured,” officials said.
Healthscope, whose profit has grown by an average of 36 percent over the past nine years, has seen its stock climb more than 20 percent since the first offer was announced.
Analysts have suggested that Healthscope’s stock price could rise as high as $7 if the radiology business were sold and the hospitals were retained.