Key terms of the agreement
• GOSI/ Hassana will transfer their38.9 per cent stake in Tadawul-listed National Medical Care Company (CARE) at a price of SR70 ($18.64 per share, implying an attractive 2018E EV/EBITDA multiple of less than 15x
• NMC will contribute all of its existing Saudi Arabia-based assets as part of the formation of the JV platform
• Under the terms of the agreement, there will be revaluation of NMC's assets, representing considerable value accretion at the joint-venture as well as NMC Health plc level
• The JV will have a combined bed capacity of 1,489 (664 beds contributed by NMC and 825 by CARE)
• Formation of the JV is subject to regulatory approvals and signing of definitive agreements after completion of necessary due diligence by both the parties
• For the year ended 31 December 2017, NMC reported gross assets of US$3.0 billion and profits before tax of US$210.4million. For the same period, CARE reported gross assets of US$380.0million and profits before tax of US$26.7million
• NMC will retain a majority stake, as well as operational control, in the JV
NMC will hold a voting majority in the proposed JV, with the exact stake subject to final terms. Consequently, NMC will fully consolidate the JV financials. NMC will also retain operational and management control of the assets held by the JV.
The proposed JV platform will serve as the main vehicle of future expansion for NMC in Saudi Arabia, said the statement from Emirati firm.
The new venture will seek to take majority, as well as minority, stakes in Saudi Arabia-based healthcare operators (organic and inorganic investments), along with acquiring O&M contracts to manage private and government sector hospitals in the country.
The JV platform is expected to benefit significantly from NMC’s operational expertise in the healthcare sector, as well as Hassana’s local market knowledge and strategic position as a long term financial investor.
The formation of this platform represents the strong commitment by both NMC and Hassana towards the Saudi Arabia healthcare market.
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