Aster DM Healthcare and Blackstone-owned hospital platform Quality Care India Ltd (QCIL) on Friday said they have signed definitive agreements for a merger.
The merged listed entity will be named as Aster DM Quality Care Limited.
Blackstone will be the largest shareholder in the merged entity with about 30.7% stake, Aster promoters will have around 24% and the rest will be held by public and other shareholders including TPG which will hold 10.22%.
The transaction values Aster at 36.6x FY24 adjusted post INDAS EV/ EBITDA, which is 45% higher than the multiple ascribed to QCIL’s 25.2x FY24
The merger is subject to regulatory, corporate and shareholders’ approvals.
Aster expects the merger transaction to close by Q3 FY26.
The merger is expected to be earnings per share (EPS) accretive.
The deal values the combined entity at over ₹42,000 crores ($5 billion), making it a top-three hospital chain in India with 38 hospitals, over 10,150 beds, and ₹7,314 crores in revenue, with presence across 25 cities in South and Central India. The combined entity will have an occupancy of 65% and the average revenue per occupied bed (ARPOB) of ₹39,100, with an EBITDA of ₹1,396 crore. The merged entity will have over 5100 doctors and 26,200 employees. Cardiac and neurology segments around 28% of the overall revenues.
Aster and Blackstone said they see significant opportunities for both brownfield and greenfield expansion by adding 3,500 new beds expected between FY24-27.
Ahead of this merger, Aster shall purchase 5% stake in QCIL from Blackstone and TPG in consideration of primary share issuance by Aster for 3.6% stake. Post the initial share acquisition, QCIL will be merged into Aster by way of a scheme of amalgamation.
Varun Khanna who is the Group MD of Quality Care will be the MD and Group CEO of the merged entity. Sunil Kumar, the current CFO of Aster will be the overall group CFO.
Azad Moopen, founder-promoter and chairman & managing director of Aster DM Healthcare will be the executive chairman of the combined entity. Moopen will continue as the executive chairman for a period of 3 years and 6 months from this date, after which, he will continue as non-executive chairman.
Aster promoters, along with Blackstone, will hold equal representation on the board and jointly control the merged entity. Independent directors to have a 50% representation on the board of the merged entity.
Moelis & Company and Advay Capital acted as financial advisors, with Kotak Investment Banking as corporate advisor and Cyril Amarchand Mangaldas as legal counsel to Aster. Blackstone and TPG, on behalf of QCIL, was advised by NovaaOne Capital as their financial advisor with Trilegal and JSA acting as legal counsel. PwC recommended the swap ratio as an independent registered valuer and ICICI Securities provided the fairness opinion on the swap ratio.
Source: Economic Times