By Robb M. Stewart
MELBOURNE, Australia--Australian healthcare provider Healthscope Ltd. (HSO.AU) Monday said it has agreed to open its books to Brookfield Asset Management after the Canadian asset manager returned with a fresh takeover bid worth up to US$3.25 billion that trumps a rival offer by a consortium of financial investors.
The raised bid, which includes an option for shareholders to retain an equity stake in an unlisted Healthscope, comes after a consortium led by private-equity firm BGH Capital in late October returned with an offer similar to one made by the financial group months earlier that was rejected as too low.
Healthscope on Monday said it wouldn't allow the BGH consortium to conduct due diligence for its lower offer, effectively backing pension-fund manager AustralianSuper into a corner. One of the biggest shareholders in Healthscope, AustralianSuper is part of the bidding consortium and has committed itself to the offer until next year.
The suitors are vying for one of Australia's biggest operators of private hospitals and its real-estate portfolio.
Brookfield is pitching an offer that values Healthscope at 4.50 billion Australian dollars (US$3.25 billion), in a scheme valued at A$2.585 a share that depends on it securing 100% of the healthcare company. Failing that, it has offered A$2.42 cash a share, valuing Healthscope at A$4.27 billion (US$3.09 billion) provided it secures a stake of at least 50.1%. The deal would allow Healthscope to still pay out an interim dividend.
In a regulatory filing, Healthscope said Brookfield's offer would be open for at least two weeks after a meeting of Healthscope's shareholders set for no sooner than April 1. AustralianSuper, which has a 16% stake in Healthscope, has locked itself into the rival bid until the end of March.
Healthscope Chairman Paula Dwyer said Brookfield's offer was attractive for shareholders and offered more options, including either all-cash for shares or the opportunity to retain a stake in the healthcare company.
She added the board in evaluating the two proposals took into account progress made by the company over the last year and an improving outlook, including selling the company's pathology businesses in Asia and recently opening Northern Beaches Hospital in Sydney.
Healthscope operates a portfolio of more than 40 hospitals in Australia and 24 pathology laboratories in New Zealand. In May, it closed two hospitals in southern Australia and in July it sold its Asian pathology division for A$279 million.
Ms. Dwyer said Brookfield would be allowed to conduct due diligence for its offer on an exclusive basis, though Healthscope would continue to push ahead with plans to spin off and lease back a number of its Australian properties.
BGH, AustralianSuper and partners Carob Investment Private, Ontario Teachers' Pension Plan Board and Canada Pension Plan Investment Board first approached Healthscope in late April with an offer of A$2.36 cash a share. Then in May, Brookfield offered A$2.50 a share. Healthscope declined to open its books to either offer.
The BGH consortium last month returned with a similar bid, valuing Healthscope at about A$4.11 billion (US$2.97 billion), and it increased its total stake in the healthcare company to a little over 19%.
Founded in 1985 and initially listed on the Australian Securities Exchange in 1994, Healthscope was bought in late 2010 by a consortium managed by TPG and the Carlyle Group. It was again listed on the ASX in mid-2014.
The company's shares jumped 11% in early trading Monday to A$2.315, tracking back toward a mid-May high of A$2.58.
The offer from Brookfield is subject to a number of conditions, including regulatory approvals and arranging committed debt financing.
Write to Robb M. Stewart at firstname.lastname@example.org