After rejecting three offers, Mediclinic International’s board said yesterday a fourth offer that values the private hospital group at $4.44 billion (R74.3bn), by the Remgro and MSC Mediterranean Shipping (MSC) consortium, appears attractive to shareholders.
The consortium made an unsolicited cash offer to acquire all of Mediclinic on May 26. On June 9, it’s board rejected the offer of 463 pence a share (including a final dividend of 3 pence paper share for the year to March 31), on the basis that it significantly undervalued Mediclinic. Remgro is Mediclinic’s majority 44.6 percent shareholder.
Mediclinic’s share price shot up 8.6 percent to R95 on the JSE yesterday afternoon, while the price was up 7.46 percent to 475.20 pence per share on the London Stock Exchange. Its JSE market capitalisation was R64.4bn yesterday morning.
Smalltalkdaily analyst Anthony Clark said the rise in share price indicated the market appeared to favour the offer. Although the deal was not yet formally accepted by Mediclinic’s board, the Remgro consortium would not have, by now, pitched an offer that was not likely to be accepted by the independent board, he said.
He said Mediclinic would likely be delisted if the deal went ahead, and from a Remgro perspective, would represent a further cleaning up of its investment portfolio after delisting RMB Holdings and RMH, so as to reduce the premium that Remgro trades at relative to the value of its investments.
Anchor Capital investment analyst Stephan Erasmus said while the offer seemed fair to shareholders, it was hard to see what Remgro had in mind for Mediclinic.
“Remgro’s share price would not likely gain value by holding Mediclinic as an unlisted entity. There must be a plan to unlock value, perhaps listing or disposing of Mediclinic’s regional business separately or maybe a property sale,” he said.
The Remgro consortium had until yesterday to put in a formal offer, but this has been extended to August 4.
The consortium’s fourth proposal, received by Mediclinic only on Wednesday, was pitched at 504 pence per share, including the dividend, which is 8.9 percent above the first offer.
The latest proposal represented a 35 percent premium to the share price of 373 pence on May 25, the day prior to the receipt of the initial proposal.
It was also at a 50 percent premium to the average share price of 337 pence for the six months to May 26, and a 23 percent premium to the share price of 411 pence on June 7, the day prior to the market speculation of an approach.
“The independent board remains confident in Mediclinic’s strategic direction and long-term prospects, as the group positions itself as an integrated healthcare partner… Supported by leading market positions. However, having weighed all factors… The independent board is of the view the near-term value realisation of the latest proposal provides Mediclinic’s shareholders an attractive alternative to the group continuing as an independent company,” the group said.
Erasmus said Mediclinic was recovering strongly from Covid, and the business outlook “is arguably better than before the pandemic”.
“There is a strong likelihood the UAE business will benefit from a better macro environment supported by elevated oil prices. An offer of 508 pence is reasonable, representing a 27 percent premium over the pre-pandemic Mediclinic price of 400 pence. The Swiss business has a total asset value of CHF5 billion, but the Swiss regulatory environment remains a concern,” he said.
The board said it intended to continue discussions with the consortium to progress the latest proposal.
BUSINESS REPORT ONLINE