KKR-backed hospital management company Radiant Life Care announced on Monday that it will acquire a majority stake in Max Healthcare Institute from Max India through a series of transactions that will include Radiant purchasing a 49.7% stake in Max Healthcare from South Africa-based hospital operator Life Healthcare to create a combined entity valued at Rs 7,242 crore. Prior to the merger transaction involving Radiant and Max Healthcare, Max India will demerge its non-healthcare businesses (comprising Max Bupa and Antara Senior Living) into a new wholly owned subsidiary of Max India whose shares will be listed separately on both BSE and the NSE.
This new company will be spun off, and shareholders of Max India will receive one share of Rs 10 each of the new company for every five shares of Rs 2 each they hold in existing Max India. Following the demerger and the spin-off, Radiant’s healthcare assets will be demerged into Max Healthcare which will then undertake a reverse merger with Max India to create merged Max Healthcare. As a result of the reverse merger, shareholders of Max India will receive 99 shares of the merged entity of Rs 10/- each for every 100 share of Rs 2/- each that they hold in Max India. Post-merger, Max India will get dissolved without being wound up and subsequently, the equity shares of the merged entity will get listed on the BSE and NSE.
According to Max India, the combination of Radiant and Max Healthcare will create the largest hospital network in North India, which will become among the top three hospital networks in India by revenue and the fourth largest in India in terms of operating beds. The merged entity will operate over 3,200 beds throughout 16 hospitals across India, the company said. The combined entity will be promoted by Abhay Soi and co-promoted by KKR. Max India’s current promoters will subsequently step down through the process of de-promoterisation after completion of the merger. KKR will also acquire an additional stake of 4.99% in the merged entity from Max promoters, funded primarily from KKR Asian Fund III.
The resultant shareholding of the combined entity will be 51.9%, 23.2% and 7.0% (post sale of 4.99% in merged entity) held by KKR, Abhay Soi and Max Promoters respectively, with the balance being held by public and other shareholders. Sanjay Nayar, member and CEO of KKR India, said the country’s private hospital market has grown rapidly in recent years, and KKR expects demand for quality healthcare to outpace overall economic growth as Indians demand better quality care. “The combined business will enjoy a leadership position amongst the attractive metros of Delhi and Mumbai,” he stated.
Analjit Singh, founder and chairman emeritus of Max Group, said the merger offers significant growth potential with revenue and cost efficiencies to be extracted. “Both Max and Radiant possess complementary sets of capabilities in running healthcare establishments and KKR brings with it extensive global experience and expertise in healthcare investments as well as capabilities in prudent financial management and efficient capital allocation,” he said.
According to the company, the consolidation of the healthcare business of Radiant with Max Healthcare in a single listed entity can create significant value for all stakeholders and has a significant potential to extract cost savings, realise synergies and improve margins. The merged entity will continue to use the current brand name Max Healthcare, with appropriate adjustments to its logo.
Source: Financial Express