Clock ticks down on VPS Healthcare’s bid for Al Noor Hospitals

VPS Healthcare, the UAE hospitals group, has until December 8 to table a formal offer for Al Noor Hospitals, or walk away from a takeover bid.

The clock has been set ticking by the publication of the formal circular to shareholders of Al Noor from Mediclinic, the South African healthcare company which has tabled a US$2.2 billion offer for Al Noor, quoted on the London Stock Exchange.

London takeover regulators said that VPS would have to submit an offer at least seven days before a special meeting of Al Noor shareholders to approve the Mediclinic deal. That meeting has now been scheduled for December 15, according to the circular published at the end of last week.

It emerged that VPS has retained Deutsche Bank, regarded as experts in the UAE health sector, to advise on its options in any potential offer, following remarks from Dr Shamsheer Vayalil, the founder and managing director of VPS Healthcare, that he would “definitely” make a bid.

A spokesman for VPS declined to comment on anything related to a takeover.

The circular reveals that Ron Lavater, the chief executive of Al Noor since the summer of 2014, would receive a $1.5 million retention bonus by the enlarged Al Noor-Mediclinic group in two instalments up to nine months after the deal is sealed next year.

The bonus is subject to shareholder approval and the achievement of performance targets “relating to his successful stewardship of the company and his successful conclusion of the combination”.

The circular also shows a slowdown in current trading at Al Noor. It said: “Despite strong performance from Al Ain Hospital, inpatient volume remained flat, impacted mostly by a volume decrease at the Khalifa Street Hospital [in Abu Dhabi], which faced temporary disruption from ongoing refurbishments and increased competition.”

Most of Al Noor’s businesses showed good growth in the quarter, albeit slightly below expectations because of a greater seasonal impact than expected, delays in hiring new physicians and increasing competition in the market, the circular said.

As a result, the management of Al Noor has revised its revenue expectations for the second half of 2015. “In relation to Al Noor’s unaudited interim condensed consolidated financial statements for the six months ended 30 June 2015, Al Noor no longer expects to deliver slightly higher revenue growth in the second half of 2015 than in the first half of the year.”

However, Al Noor continues to expect underlying growth in earnings – before interest, tax, depreciation and amortization – in the current half will be higher than the first half of 2015.

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Frank Kane

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