S Africa’s Life Healthcare to buy 95% in Alliance Medical for $727 mn

Life Healthcare Group, the second-largest private hospital operator in South Africa, yesterday struck a deal to buy a controlling 95-per cent stake in British diagnostics specialist Alliance Medical for $727 million (£590 million) in cash.

Under the deal, Life Healthcare will initially pay around £550 million and deferred cash of up to £40 million depending on certain performance.

Life Healthcare is buying the stake from funds managed by M&G Investments, Talbot Hughes Mckillop LLP and senior management of Alliance Medical.

Alliance Medical's senior management will retain the remaining 5-per cent stake.
 
Life Healthcare will fund the transaction through a temporary loan from Barclays and South Africa's Rand Merchant Bank and then refinance the loan by undertaking a rights issue at a later date.

The transaction is part of the Johannesburg-based private hospital owner's strategy to expand its global footprint to eight countries in the European Union.

Life Healthcare said that the deal would give it access to the  national health systems in UK, Italy and Ireland. Life Healthcare also operates in Poland and India.

Life Healthcare added that the deal will accelerate its geographic diversification from 4 per cent to 24 per cent revenue outside of South Africa.

Life Healthcare, formerly Afrox Healthcare, is the second-largest private hospital operator in South Africa, with 6,500 beds.

Owned by Brimstone Investment Corp, Life Healthcare is also the largest black-owned hospital operator in South Africa.