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Healthscope Launches $2.3 Billion Bid for Symbion

Reuters
Monday, 28 May 2007 | 8:52 PM ET

Australian hospital operator Healthscope formally launched a A$2.8 billion (US$2.3 billion) bid for Symbion Health on Tuesday, backed by two private equity firms.

The bid was in line with a proposal outlined earlier this month, under which Healthscope and the larger Symbion would combine their hospital and pathology businesses.

Ironbridge Capital and Archer Capital would then pay A$1.04 billion to take control of Symbion's pharmacy distribution and consumer arms, which account for around a third of its earnings.

Symbion, a pathology, radiology and pharmacy company, has been touted as a likely target of consolidation in Australia's healthcare industry, and in January rejected a A$2.3 billion approach from Primary Health Care.

Rival drugs firm Sigma Pharmaceuticals, which said last week it would decide whether to launch a rival offer with the next two weeks, said it was still studying its position. "We are in the same situation as that," Sigma Managing Director Elmo de Alwis told Reuters on Tuesday.

Sigma is interested in Symbion's consumer and pharmacy wholesaling business, which Healthscope and its consortium partners have valued at about A$1 billion.

Symbion Chief Executive Robert Cooke said Sigma had made some approaches in recent days, adding that Symbion had allowed three weeks for a rival proposal to emerge. "But it needs to be a serious offer and, obviously, a superior offer, and that's a question that you need to ask Sigma," he told a media briefing.

The cash and share offer valued Symbion at about A$4.37 a share, based on Healthscope's closing price on Monday of A$5.74. Symbion shareholders would receive A$1.84 in cash plus between 0.4642 and 0.4086 Healthscope shares, depending on the value of Healthscope shares leading up to the transaction.

Symbion shares closed on Monday at A$4.39.

Healthscope said Symbion had backed the deal, and it expected to achieve cost synergies of A$79 million a year by the end of the third full year after the deal.

Analysts have said previously Healthscope would be the logical buyer of Symbion, given the synergies between the two companies.

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