(MENAFN- Gulf Times) Mediclinic International agreed to combine with healthcare provider Al Noor Hospitals Group to create the biggest private healthcare provider in the United Arab Emirates even as rival NMC Health said it would continue to pursue Al Noor.
Al Noor proposes to buy Johannesburg-based Mediclinic in a reverse takeover, the companies said in a statement. Al Noor investors can opt to get a special dividend of £3.28 a share or tender their stock for £11.60 apiece, which represents a 39% premium over the October 1 closing price. Shares of Al Noor soared by a record in London trading, giving it a market value of £1.38bn ($2.12bn).
The deal with Mediclinic, which was hammered out as Al Noor spurned expressions of interest from NMC, aims to create a hospital company with operations in the Gulf states, South Africa and Switzerland.
Mediclinic is seeking to expand in countries where rising household incomes have led to growing demand for private healthcare.
NMC, a healthcare company that like Al Noor is based in Abu Dhabi, said separately that a combination of its own operations with Al Noor offered a stronger "strategic and financial rationale for all stakeholders."
The company plans to continue its pursuit "despite the lack of meaningful engagement from the board of Al Noor," and urged investors not to make a decision on the Mediclinic deal.
"The Al Noor board is unanimous on the Mediclinic opportunity and this is what we are pursuing," Ronald Lavater, chief executive officer of Al Noor, said in a conference call with analysts. The proposal from NMC "was inferior both on the value and the certainty," he told reporters on Wednesday.
Under the agreement announced on Wednesday, Mediclinic shareholders will get 0.625 new Al Noor shares for each held in Mediclinic, as well as an interim dividend to be paid in December. The transaction would result in Mediclinic shareholders owning 84% to 93% of the combined business, which is to be renamed Mediclinic International and listed on the London Stock Exchange. The company will also have a secondary listing in Johannesburg, and may trade on the Namibian Stock Exchange.
It's unlikely that NMC would have been able to match the Mediclinic offer, Andre Bekker, an analyst at Avior Capital Markets in Johannesburg, said by telephone.
"This is positive for both groups as it will probably put them on the FTSE 100 and on the radar of a number of tracker funds that would not have monitored either group previously," Bekker said.
Mediclinic entered the UK this year after agreeing to buy a stake in Spire Healthcare Group for £431.7mn. The Al Noor deal doesn't affect the Spire purchase, Mediclinic CEO Danie Meintjes said on the call. Mediclinic is "comfortable" with its Spire stake at 29.9%, he said.
Edwin Hertzog, chairman of Mediclinic, will be chairman of the combined company, while Meintjes will be CEO. The transaction, which is scheduled to be completed in the first quarter following shareholder meetings in December, won't have an impact on earnings in the first full year of consolidation, and will be accretive thereafter, Mediclinic said.
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