Consortium to acquire Mediclinic in £3.7bn deal

BY Richard Summerfield

Mediclinic International, a private hospital group based in South Africa, has agreed to be acquired by a consortium comprised of Remgro Ltd and MSC Mediterranean Shipping in deal worth £3.7bn.

Under the terms of the deal, shareholders of Mediclinic will receive 504 pence in cash for each share of Mediclinic, a premium of 23 percent from the day before the final offer was made in early June, the companies said. The deal comes after an earlier offer of £3.4bn was rejected in June by Mediclinic.

Remgro is the investment vehicle of the Rupert family which already owns a 45 percent stake in Mediclinic. The two companies will each own 50 percent of Mediclinic under the terms of the deal.

“The recommended offer represents a near-term value realisation for Mediclinic shareholders at an attractive premium,” said Dame Inga Beale, chair of Mediclinic. “Over 39 years, Mediclinic has developed into the leading international healthcare services group it is today. During this time, Remgro has remained a supportive long-term shareholder. Together with SAS, the consortium’s resources will put Mediclinic in a strong position to continue to serve patients through our broad range of high-quality healthcare services.”

“I am delighted that Remgro is participating in this transaction, which is fully aligned with our strategy of prioritising our ownership of structurally attractive, unlisted assets,” said Jannie Durand, chief executive of Remgro. “Since its founding, Remgro has been a long-standing and supportive shareholder of Mediclinic. We are proud of what the business has achieved over that period and look forward to continuing our support, alongside our partner SAS, as the business transitions to the next phase of its evolution under stable, long-term ownership. Under the stewardship of the Consortium, Mediclinic will be well-positioned to execute on its strategy and undertake the investment required to realise the full potential of the business.”

“We are delighted to be partnering with Remgro on the acquisition of Mediclinic, a business we have great admiration for,” said Diego Aponte, group president of MSC. “MSC is very well placed to provide long-term capital, as well as our insight and experience from operating a global business, in order to support the strategic ambitions of the Mediclinic management team. We believe that, alongside Remgro, our ownership will provide Mediclinic with significant resources to the benefit of all of Mediclinic’s stakeholders, including in particular its patients, employees, doctors and host governments.”

News: Consortium to buy S.Africa hospitals firm Mediclinic for $4.49 bln

Global dealmakers expect activity uptick in 2H22, reveals new survey

BY Fraser Tennant

Global M&A deal activity is expected to increase in the second half of 2022 despite challenging market conditions, according to a new Datasite survey.

In its ‘2H 2022 M&A Outlook’ survey, Datasite reveals that 68 percent of the more than 540 global dealmakers surveyed said they expect global deal volume to rise in the second half of 2022, with 41 percent expecting to see the biggest increase in transformational acquisitions or mergers, followed by debt financing at 37 percent and secondary buyouts at 34 percent.

Additionally, 78 percent of dealmakers are pricing at least a 5 to 7 percent increase in inflation, if not higher, into their financial valuation models for the rest of the year. When asked how inflation is expected to impact M&A deal flow, 46 percent of dealmakers said they expect a greater component of deals to be financed via equity, with an additional 34 percent predicting more straight cash deals.

Drilling down, the Datasite survey states that uncertain valuations, inflation and the Russia-Ukraine war are affecting other aspects of dealmaking, including deal size and the timing of completion. Dealmakers said the war, as well as inflation and the cost of capital, are factors likely to prevent a deal from closing before the end of 2022.

Qualitative feedback from dealmakers also points to uncertainty around valuations as another factor having a significant impact on M&A overall, including pausing larger acquisitions and merger processes, especially among corporate and private equity dealmakers.

“Despite geopolitical uncertainties and overall market volatility, global deal activity itself is still strong,” said Rusty Wiley, chief executive of Datasite. “However, when it comes to valuations, dealmakers will likely adjust multiples downward so the net result may be lower valuations overall in the second half of the year.”

And while valuations are lowering, deal times are lengthening. “The median length of time for a new deal, or asset sale or merger, has increased by 5 percent year-over-year so far this year, while deal preparation time is also rising, up 31 percent, for the same time frame,” added Mr Wiley. “This means many dealmakers are ‘ready to go’ but have not launched their projects just yet.”

Report: 2H 2022 M&A Outlook

Amazon’s healthcare push continues

BY Richard Summerfield

Amazon has agreed to acquire primary care organisation One Medical in a deal valued at around $3.9bn.

Under the terms of the deal, Amazon will acquire One Medical for $18 per share in an all-cash transaction valued at approximately $3.9bn, including One Medical’s net debt. Completion of the transaction is subject to customary closing conditions, including approval by One Medical’s shareholders and regulatory approval. Upon completion, Amir Dan Rubin will remain as chief executive of One Medical.

“We think health care is high on the list of experiences that need reinvention,” said Neil Lindsay, senior vice president of Amazon Health Services. “Booking an appointment, waiting weeks or even months to be seen, taking time off work, driving to a clinic, finding a parking spot, waiting in the waiting room then the exam room for what is too often a rushed few minutes with a doctor, then making another trip to a pharmacy – we see lots of opportunity to both improve the quality of the experience and give people back valuable time in their days. We love inventing to make what should be easy easier and we want to be one of the companies that helps dramatically improve the healthcare experience over the next several years.”

He added: “Together with One Medical’s human-centered and technology-powered approach to health care, we believe we can and will help more people get better care, when and how they need it. We look forward to delivering on that long-term mission.”

“The opportunity to transform health care and improve outcomes by combining One Medical’s human-centered and technology-powered model and exceptional team with Amazon’s customer obsession, history of invention, and willingness to invest in the long-term is so exciting,” said Mr Rubin. “There is an immense opportunity to make the health care experience more accessible, affordable, and even enjoyable for patients, providers, and payers. We look forward to innovating and expanding access to quality healthcare services, together.”

One Medical, whose parent company is San Francisco-based 1Life Healthcare, Inc, is a membership-based service that offers virtual care as well as in-person visits. It also works with more than 8000 companies to provide its health benefits to employees. One Medical has about 767,000 members and 188 medical offices in 25 markets, according to its first-quarter earnings report, which also showed the company had incurred a net loss of $90.9m after pulling in $254.1m in revenue.

Amazon’s interest in healthcare services has been growing for some time. In 2018, the company acquired online pharmacy PillPack for $750m before opening its own online drug store that allows customers to order medication or prescription refills and have them delivered to their front door in a couple of days. And last year, it began offering its Amazon Care telemedicine programme to employers across the US.

News: Amazon strikes $3.5 bln deal for One Medical in long march into U.S. healthcare

Suncorp sells banking arm for $3.3bn

BY Richard Summerfield

Australia and New Zealand Banking Group (ANZ) has announced a $3.3bn deal to acquire the banking arm of insurer Suncorp Group.

Under the terms of the deal, ANZ will continue operating the Suncorp Bank brand for five years as it takes on an additional $47bn in home loans and $45bn in deposits.

The acquisition is subject to approval from the Australian Competition and Consumer Commission and the federal treasurer, Jim Chalmers. The deal is also subject to a minimum completion period of 12 months and to certain other conditions.

“This proposal has been assessed through the lens of creating value for shareholders and, just as importantly, to ensure there is alignment of purpose and values and positive outcomes for our people and customers,” said Christine McLoughlin, chairman of Suncorp. “Suncorp Group, which is the proud home of several of Australia and New Zealand’s leading and most trusted insurance brands including AAMI, GIO, Shannons, Apia and Vero, and of course the Suncorp brand, will continue to offer the same great service to Queenslanders.

“Both businesses will benefit from a singular focus on their growth strategies and investment requirements,” she continued. “We believe the agreed price fairly values the Bank and reflects the hard work of our people and progress made on delivering our strategic objectives. Our purpose of building futures and protecting what matters – the focus of our company for over 100 years – will remain at our core and enable our people to deliver on our vision to create the leading Trans-Tasman insurance company.”

“The acquisition of Suncorp Bank will be a cornerstone investment for ANZ and a vote of confidence in the future of Queensland,” said Shayne Elliott, chief executive of ANZ. “With much of the work to simplify and strengthen the bank completed, and our digital transformation well-progressed, we are now in a position to invest in and reshape our Australian business. This will result in a stronger more balanced bank for customers and shareholders.

“ANZ has licenced the Suncorp Bank brand for five to seven years and we are committed to maintaining its current branch footprint in Queensland for at least three years post completion,” he added. “This is a growth strategy for ANZ and we will continue to invest in Suncorp Bank and in Queensland for the benefit of all stakeholders.”

Going forward, Suncorp will continue to be led by its current chief executive Clive van Horen, and according to Mr Elliott there will not be any job losses at the company for at least the next three years. The company’s insurance operations in Australia and New Zealand were not included in the deal.

News: Australia's ANZ to buy Suncorp banking arm for $3.3 billion, boost mortgage business

Legal fight looms as Musk abandons Twitter takeover

BY Richard Summerfield

Elon Musk has sought to abandon his $44bn takeover of social media giant Twitter Inc.

“Mr Musk is terminating the merger agreement because Twitter is in material breach of multiple provisions of that agreement, appears to have made false and misleading representations upon which Mr Musk relied when entering into the merger agreement, and is likely to suffer a Company Material Adverse Effect,” wrote lawyers for Mr Musk to Twitter.

Mr Musk has claimed that Twitter had failed to respond to multiple requests for information on fake or spam accounts on the platform, he also noted that he was walking away from the bid because Twitter had removed a number of high-ranking executives and one-third of the talent acquisition team, which was in contravention of the company’s obligation to “preserve substantially intact the material components of its current business organization”.

To walk away from the transaction, as per the merger agreement filed with the US Securities and Exchange Commission (SEC), Mr Musk must be able prove that Twitter breached the original agreement or risk being sued for a $1bn breakup fee.

In response to Mr Musk’s claims, Twitter said that it planned to sue Mr Musk to complete the $44bn merger and that it was “confident” it would prevail. “The Twitter board is committed to closing the transaction on the price and terms agreed upon with Mr Musk and plans to pursue legal action to enforce the merger agreement,” said Bret Taylor, chair of the board at Twitter, in a tweet.

The ‘on again, off again’ relationship between Twitter and Mr Musk, at one point the company’s largest shareholder, has played havoc with the company’s share price in recent months. Mr Musk announced an agreement to acquire the company on 25 April, having offered to purchase all of the company’s shares for $54.20 each; the company’s stock is currently trading at around $36.81 per share. Twitter’s share price fell by 7 percent in extended trading after the announcement that Mr Musk was planning to walk away from the deal.

The likelihood of the deal being completed has been in question for some time. On 13 May, Mr Musk said the deal was “on hold” while he awaited details supporting Twitter’s assertion that fewer than 5 percent of its users were spam or fake accounts. Mr Musk claimed that the true figure was 20 percent and said Twitter would need to show proof of the lower number for the purchase to go through.

News: Twitter vows legal fight after Musk pulls out of $44 billion deal