Frankfurt Fresenius wants to merge its clinic operator Helios with a competitor and bring a minority owner on board at the subsidiary. “In the first step, we sound out the market for suitable takeover targets. If everything fits, their owners could then receive shares in Helios,” said Wolfgang Hofmann, Head of Strategy and M&A at the Fresenius Group, the Handelsblatt. The growth of Helios should be further strengthened.
However, Helios will remain part of Fresenius, emphasizes Hofmann: “We want to remain the majority owner.”
Company boss Stephan Sturm declared in June that Fresenius was open to partners who would participate in the further growth of Helios. He also emphasized at the time that it was all about a minority participation by third parties – and a “concrete, larger growth step that we would then strive for together with such a partner”.
Fresenius does not have sufficient funds to finance the expansion of all business areas itself. As such, options include Helios acquiring a rival first and then bringing an investor on board to fund the deal. Fresenius looks at all hospital chains that come onto the market, but has clear criteria according to which the group wants to invest.
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“Possible acquisitions must fit into our ecosystem and offer added value for patients,” said Hofmann. At the moment it is not a question of building up completely new areas, but of using growth opportunities in areas such as multidisciplinary clinics, outpatient care, dialysis, pharmaceuticals, medical technology and reproductive medicine.
helios‘ possible takeover targets are themselves in negotiations
According to industry experts, clinic chains such as Ramsay Santé, Elsan or Mediclinic, in which private equity investors hold shares, are suitable for Helios. However, these three companies are currently busy with deals themselves.
US private equity firm KKR has made a takeover bid for Australia’s Ramsay, which holds 52 percent of listed French Ramsay Santé. The latter comes to a valuation of 5.8 billion euros, including debt. In turn, KKR, together with investor Ardian, recently acquired French rival Elsan for around 3.5 billion euros, including debt.
According to financial sources, KKR is considering spinning off Ramsay Santé as the concentration of Ramsay Santé and Elsan in the hands of KKR raises competition concerns.
Mediclinic is currently being courted by South African billionaire Johann Rupert and Switzerland’s MSC, who have made a £3.7 billion takeover bid for the South African-headquartered firm. Among other things, Mediclinic owns the hospital chains Spire from Great Britain and Hirslanden from Switzerland, which could also be of interest to Helios. Other possible candidates include Greece’s market leader Hellenic Healthcare Group or the Finnish Mehiläinen from the portfolio of financial investor CVC.
No fixed timetable for a deal
“We’re looking at a lot, but we’re not set on a specific takeover target,” said Hofmann. There is no timetable for a deal. “Of course, the macroeconomic environment and the conditions on the financing markets also play a major role in our considerations,” said Hofmann.
There are no geographical restrictions. However, industry experts consider the takeover of a European rival to be more likely than that of a chain of clinics in another world region.
The Fresenius CEO wants to drive the growth of the clinic subsidiary.
(Photo: imago images/sepp spiegl)
According to financial sources, Fresenius is working with Bank of America and JP Morgan on the search and has already held initial talks with investors such as KKR and CVC. In the longer term, a merged chain of clinics could be listed on the stock exchange. However, an IPO prior to an acquisition is currently considered impossible.
Helios posted an operating result of 1.6 billion euros last year and announced a profit increase of 10 percent for 2022 and could be valued at 14 to 18 billion euros in a transaction in line with listed rivals. Since Helios wants to co-finance the deal through an investor, a takeover for less than three billion euros is unlikely, according to financial circles.
Many medium-sized deals in the hospital market
While Helios is looking for a large partner, the company has said it has little interest in a number of smaller chains of clinics that are about to hit the market in Germany, most of which are likely to end up with private equity firms.
According to financial circles, the investment bank William Blair sent information packages on the eye clinic chain Zentrum Gesundheit to potential bidders on behalf of Nord Holding from Hanover a few days ago. The company has an annual operating result (Ebitda) of more than 20 million euros.
In addition, an auction of the radiology chain Rad-X is to start in September, which has an Ebitda of more than 25 million euros. Lincoln acts as a sales advisor to the investor Gilde Healthcare. Around 15 times the operating profit was paid for the recently completed sales of the eye clinic chains Veonet and Sanoptis and the chain Meine Radiologie. A similar assessment is also expected for Zentrum Gesundheit and Rad-X.
The eye clinic chain Artemis is also on the market. Owner Montagu, a private equity firm, has hired Goldman Sachs to find a buyer. In the event of a deal, the company could be valued at around EUR 800 million with an operating result (Ebitda) of more than EUR 60 million, according to financial circles.
Investor Trilantic is also preparing a sales process for its Oberberg clinics specializing in psychiatry. The company with almost 50 million euros operating result (Ebitda) could be valued at around 600 million euros. The sales process led by JP Morgan is scheduled to start after the summer.
The owners of the companies and their advisers declined to comment or could not be reached at first.
Pandemic burdens Fresenius
After two years affected by the coronavirus, the Fresenius healthcare group expects the pandemic to have negative effects and slower growth than before in 2022. Many operations and treatments in the clinics have been postponed, and the dialysis subsidiary Fresenius Medical Care (FMC) has experienced a disproportionately high patient mortality rate due to Covid-19.
The corona pandemic has weighed on Fresenius’ business.
(Photo: dpa)
With four business segments, Fresenius is broadly positioned in the healthcare market. The largest subsidiary is FMC, which is also listed in the Dax, followed by the hospital company Helios, the medicines division Kabi and the subsidiary Vamed, which specializes in hospital construction and operation.
The Fresenius share has lost around half of its value in the past five years. Last year, CEO Sturm also raised the possibility of reviewing the group’s structure in order to increase the company’s valuation.
Assistance: Maike Telgheder
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