Thursday, March 14, 2013

Sime Darby, Ramsay Health in Southeast Asia JV Talks

Fox Business
Malaysia's Sime Darby Bhd. (4197.KU) and Australia's Ramsay Health Care Ltd. (RHC.AU) are in talks to form a joint venture that combines several hospitals in Southeast Asia, a person familiar with the matter said.
The move comes as rising incomes and an aging population in the region prompt healthcare companies to seek greater scale. Healthcare assets are largely shielded from swings in economic growth, making them appealing as a defensive investment for companies seeking exposure to emerging economies.
The boards of both companies are yet to approve the venture, which will include six hospitals and an education facility from Sime Darby's healthcare unit and Ramsay's Indonesian division.
Sime Darby's healthcare unit reported fiscal 2012 profit before interest and tax of 26 million Malaysian ringgit (US$8.4 million), a figure expected to grow significantly with the contribution from two newly opened hospitals in Malaysia.
Sime's contribution to the joint venture includes those hospitals plus another in Malaysia named Subang Jaya, which have a combined total of 910 beds. It also includes the Sime Darby Nursing and Health Sciences College, which provides programs approved by Malaysia's Ministry of Higher Education.
Ramsay will inject its entire Indonesian unit, which last month reported half-year earnings before interest, or Ebit, of 33 billion Indonesian rupiah (US$3.4 million). Two of the group's hospitals are in Jakarta, while one is in Surabaya.
Sime will receive between MYR300 million and MYR400 million from Ramsay to ensure the joint venture is evenly split, and Ramsay has discussed the payment with its banking syndicate, the person said.
Ramsay said in November 2011 that it had an underwritten debt facility worth 2 billion Australian dollars (US$2 billion) from banks including ANZ Banking Group Ltd. (ANZ.AU), Westpac Banking Corp. (WBC.AU) and National Australia Bank Ltd. (NAB.AU).
The vehicle could have a market value of more than MYR1.55 billion, based on earnings multiples of listed Malaysian healthcare companies such as KPJ Healthcare Bhd. (5878.KU).
It will seek to make acquisitions in Southeast Asia, and may pursue an initial public offering on the Kuala Lumpur Stock Exchange, the person familiar said.
If the joint venture talks are successful, Sime Darby--the world's largest listed palm-oil producer by acreage--will be freer to focus on its other businesses that range from property development to automobile assembly.

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