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Monday, 17 May 2021

Cleopatra wants 100% of Alex Medical

Cleopatra mounts Alex Medical takeover bid: Cleopatra Hospitals Group (CHG) has submitted a mandatory tender offer to acquire up to 100% of Alexandria Medical Services in a transaction that would value the company at EGP 550 mn, the EGX-listed group said in a statement (pdf) this morning. The company has offered to purchase all 14.3 mn shares at EGP 38.53 apiece.

This valuation is below initial offers submitted by other bidders, which were reported earlier this month to be in the region of EGP 700-750 mn. PwC’s due diligence report suggested that this could rise to EGP 800 mn, given the strong competition for the company.

Cleo’s MTO is currently being studied by regulators, the Financial Regulatory Authority confirmed (pdf).

We’ve known for a month that Cleopatra was eyeing a stake in Alex Medical: CHG submitted in mid-April a non-binding offer to acquire Abu Dhabi Commercial Bank’s 51.4% stake in the company. The formal offer submitted today, which would value the Gulf lender’s stake at EGP 282.7 mn, is “in line with the process that was initiated by ADCB’s advisors,” CHG said.

What they said: “Alex Medical is a strategic acquisition, as part of the group’s expansion plan and strategy to develop and provide high-quality medical services to Egyptians across the country,” said Cleopatra CEO Ahmed Ezzeldin. The company has a large footprint in Alexandria and would allow CHG to expand outside of Cairo to the country’s second-biggest city, where demand is increasing for medical services, he said.

The latest play in a bidding war for Alex Medical: Cleopatra is among six interested bidders who want to snap up ADCB’s stake. The other five include Nile Scan, Alexandria for Medical Investment Company (the majority shareholder of Mabaret Al Asafra Hospitals Group), healthcare investment firm Seha Capital, the UAE’s Global One Healthcare Holding, and a consortium made up of Speed Medical, Tawasol and Limevest. Final binding offers are expected to be submitted to CI Capital this week after bidders wrap up the due diligence.

This is CHG’s second attempt for a big acquisition after talks with Alameda Healthcare collapsed last week without an agreement. Neither company provided an explanation but both said regulators were not to blame.

How will Egypt’s competition watchdog respond to CHG’s play for Alex Medical? The Egyptian Competition Authority is likely not to have concerns over this acquisition as it gives CHG the chance to expand in a new geographical area rather than a bigger market share inside Cairo as the case was with Alameda, sources tell us.

Advisors. EFG Hermes is acting as CHG’s financial advisor, while MHR & Partners and White & Case LLP act as the legal advisors. CI Capital is the sell-side advisor.

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