Manipal Hospitals set to buy Medanta for ₹6,000 crore

K Giriprakash Bengaluru | Updated on July 15, 2019 Published on July 15, 2019

Valuation issues sorted out with promoters of hospital chain

Barring a last-minute hitch, Manipal Hospitals is all set to acquire one of the leading hospital chains in the country, Medanta, for ₹5,500-6,000 crore with almost all the hurdles having been cleared for the takeover, including necessary due diligence of the healthcare major.

“If we had to face any roadblocks, we would have come across it by now. We have crossed most of the hurdles but there can be a slip between the cup and the lip even at the last moment. It typically comes from someone who has suddenly developed cold feet,” a top executive who is involved in the acquisition told BusinessLine.

A year of negotiations

Negotiations between the two groups have been going on for over a year now with most of the issues concerning the stake held by the Medanta promoters’ families and the valuation having been ironed out. The due diligence by Manipal has also been carried out, sources said.

The existing investors of Medanta include cardiac surgeon Naresh Trehan, PE fund Carlyle and the Singapore-based investment holding firm Temasek.

Trehan and another co-founder Sunil Sachdeva, and family members who own about 55 per cent in the hospital chain will sell their stake to Manipal apart from Carlyle. Temasek is a common investor in both the hospital chains.

Carlyle had bought 27 per cent stake in Medanta at a total valuation of about ₹3,650 crore in 2013 from US-based Aventus Capital.

Hence, analysts tracking the developments said that the price being offered by Manipal Hospitals was quite fair and those exiting Medanta through this acquisition process should not have any concerns about its valuation.

The executive said most healthcare chains in the country are owned by multiple investors with PE investments coming in at different stages and at different valuations. “Investors usually come in at different times and exit at various periods. So, to get promoters and PE Funds on the same platform can sometimes be difficult,” he said. He also pointed out that there are regulatory and cultural issues which also need to be addressed while negotiating for an early settlement.

A strong brand

Manipal Hospitals has been on the lookout for acquisitions, especially in North India after setting up its own hospital in Delhi some time ago.

“The hospital chain is a very strong brand in the south of India, and health care, after a point, needs a scale. So plans to acquire more hospital chains have never been kept hidden,” the executive said.

Meanwhile, Manipal Hospitals is focusing on creating a digital healthcare platform which will use data for care continuum. The group believes that its access to high-quality data backed by experienced doctors will lead to a digital hospital and this will create a base for further expansion of the hospital chain. It wants to be part of the patients’ life-cycle right from diagnosis to cure and will extensively use data it has acquired over the years to help the patients to recover faster.

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Published on July 15, 2019
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