Mediclinic, Al Noor Reach Accord While NMC Continues Pursuit

Updated on
  • Al Noor says new firm to be called Mediclinic International
  • NMC urges shareholders not to take any action at this time

Mediclinic International Ltd. agreed to combine with health-care provider Al Noor Hospitals Group Plc to create the biggest private health-care provider in the United Arab Emirates, even as rival NMC Health Plc vowed to keep pursuing Al Noor.

The transaction will involve a reverse takeover that gives Johannesburg-based Mediclinic’s shareholders a majority stake in the combined operations, the companies said in a statement on Wednesday. Al Noor holders can opt to get a special dividend of 3.28 pounds a share or tender their stock for 11.60 pounds apiece, which represents a 39 percent premium over the Oct. 1 closing price. The latter values the deal at 1.5 billion pounds ($2.3 billion), said Mediclinic Chief Executive Officer Danie Meintjes.

The combination, hammered out as Al Noor spurned expressions of interest from NMC, aims to create a hospital company with operations spanning 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 health care. Shares of Al Noor soared by a record in London trading, giving it a market value of 1.37 billion pounds.

No Engagement

NMC, a health-care company based in Abu Dhabi like Al Noor, 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,” 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 earlier today.

Al Noor rallied 17 percent to 1,163 pence as of 3:27 p.m. local time. It earlier rose as much as 21 percent, the most since making its trading debut in London in 2013. Mediclinic fell 3.2 percent to 113.50 rand in Johannesburg. NMC slumped 0.6 percent to 804 pence in London after earlier climbing as much as 4.2 percent.

‘On the Radar’

Under the agreement announced today, 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 percent to 93 percent of the combined business, which is to be renamed Mediclinic International Plc 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 U.K. this year after agreeing to buy a stake in Spire Healthcare Group Plc for 431.7 million pounds. The Al Noor deal doesn’t affect the Spire purchase, Meintjes said on a conference call. Mediclinic is “comfortable” with its Spire stake at 29.9 percent, 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.

The moving of Mediclinic’s primary listing to London has been cleared by South Africa’s Reserve Bank and Treasury, Meintjes said. Al Noor does not expect any competition issues in the U.A.E., chief executive officer Ron Lavater said on the call.