S Africa's Life Healthcare to acquire 26-% in Max Healthcare for Rs516 crore

13 Oct 2011

Life Healthcare Group, South Africa's third-largest private hospitals group, will acquire a 26-per cent stake in Max Healthcare Institute, for around 850 million South African Rand (Rs516 crore) in cash.

With the sale, Max Healthcare, which was mulling raising money through a rights issue, has now dropped the plan. Life Healthcare will invest by subscribing to new shares of Max Healthcare.

Johannesburg Stock Exchange-listed Life Healthcare had a net income of $285 million on revenue in excess of $1 billion, in the financial year to 30 September 2010.

With a market capitalisation of over $2 billion, Life Healthcare has a network of 63 hospitals with over 8,000 beds and holds a 27 per cent market share in healthcare industry in South Africa.

In the largest foreign direct investment in the Indian healthcare sector, Life Healthcare is investing in Max Healthcare to reduce a part of the New Delhi-based company's estimated Rs900 crore debt and help in expansion by doubling its bed capacity.

Max Healthcare plans to open four new super speciality hospitals in North India by the end of this year. It currently runs six hospitals and two centres, with a total capacity of over 930 beds, 1500 physicians and 3500 support staff.

The proposed acquisition is subject to definitive agreements being entered into between the two companies, due diligence by Life Healthcare, obtaining exchange control approval from the South African Reserve Bank and any approval by the boards of both companies.