Khazanah Nasional Bhd., Malaysia’s sovereign wealth fund, offered S$3.5 billion ($2.6 billion) for the rest of Singapore’s Parkway Holdings Ltd., beating Fortis Healthcare Ltd. for Asia’s biggest hospital operator.
Khazanah offered S$3.95 a share in cash for the 76.1 percent it doesn’t already own of Parkway, the Kuala Lumpur- based fund said in a statement today. That’s 3.9 percent more than the S$3.80-a-share bid by New Delhi-based Fortis on July 1.
The deal, poised to be the third-largest takeover of a Singapore-traded company, gives Khazanah full ownership of 16 additional hospitals in eight Asian countries. Parkway would be held under the fund’s Integrated Healthcare unit with stakes in Pantai Holdings Bhd., India’s Apollo Hospitals Enterprise Ltd. and IMU Health Sdn Bhd. in Malaysia.
“Khazanah sees Parkway as strategic in terms of forwarding Malaysia’s ambition of moving up the ladder in providing health-care services to the region,” said Lim Jit Soon, an analyst at Nomura Securities in Singapore who has a “hold” rating on Parkway. “It’s a good price for shareholders.”
The buyout would hinder the expansion plans of Malvinder and Shivinder Singh, who run Fortis. The billionaire brothers are seeking to tap health-care markets in Asia, which are expanding as much as 17 percent annually. Fortis, which holds about 24.9 percent of Parkway, said it will accept the proposal.
The bid values Parkway at S$4.5 billion and closes Aug. 16.
Fortis will book a profit of about S$117 million from selling its Parkway stake, according to Bloomberg calculations. The company will get the money in 30 days, Sunil Godhwani, chief executive officer of Religare Enterprises Ltd., which is controlled by the Singh family and advised Fortis, told reporters in New Delhi.
“Fortis feels that there are more attractive opportunities to pursue its goal of building a pan-Asian health care delivery network,” Fortis said in an e-mailed statement. Fortis also said it will study the secondary listing of the company on the Singapore exchange.
Fortis gained 2.8 percent to 156.25 rupees at the 3:30 p.m. close of trading in Mumbai. Parkway, halted at the request of Khazanah today, were unchanged at S$3.88 on July 23 at the 5 p.m. close of trading on the Singapore exchange.
Parkway has more than 3,400 hospital beds in China, India and Malaysia among other Asian countries, according to its website. In Singapore, the group’s operations include the Gleneagles and Mount Elizabeth hospitals, both located close to the central Orchard Road shopping belt. It also manages a real estate investment trust and provides health-care education.
Khazanah, which was advised by CIMB Bank Bhd. and Deutsche Bank AG, offered S$3.78 a share, or S$1.18 billion, on May 27 to more than double its stake in Parkway to 51.5 percent.
The new offer values Parkway at about 28 times 2010 estimated earnings, according to Bloomberg calculations, based on an average per-share estimate of 13.9 Singapore cents. Raffles Medical Group Ltd., Parkway’s biggest Singapore-based rival, trades at 22 times earnings, according to Bloomberg data.
Parkway reported a 10 percent gain in first-quarter net income to S$25.8 million, helped by an increase in foreign patients at its hospitals in Singapore. Revenue advanced 8 percent to S$247.6 million in the period.
CEO Tan See Leng said in February that Parkway may make acquisitions in China to tap rising demand for health care in the world’s most populous nation.