RHC asks Parkway shareholders to look at its record

Friday July 16, 2010



By TEE LIN SAY

linsay@thestar.com.my




KUALA LUMPUR: Fortis Healthcare Ltd-owned RHC Healthcare Pte Ltd has appealed to shareholders of Parkway Holdings Ltd to consider its track record in acquiring and integrating acquisitions when weighing the merits of its offer for the Singapore healthcare company.



RHC posted its offer document for the Parkway takeover at S$3.80 per share yesterday morning. Acting on its behalf are The Royal Bank of Scotland and Macquarie Capital (S) Pte Ltd.



In the document, RHC said Fortis’ bed capacity had increased more than four fold from 1,749 in financial year (FY) 2006 to 7,733 in FY2010.



“The Fortis group has significantly increased its operations and shown strong growth over its last five financial years with a compounded annual growth rate of about 74% in operating income.



“It has maintained its pace by delivering 91% growth in operating income and 469% growth in net profit attributable to shareholders over the previous four quarters ended March 31,” it said.



Its network of hospitals across the region would create a platform that would be better positioned to leverage off the strengths of both the Fortis group and the Parkway group to create greater growth opportunities, it added.



The deadline for shareholders to accept the offer is August 12, 5.30pm. This is an offer for all Parkway shares, allowing them the choice of a full exit for a cash price if they wish.



Alternatively, shareholders can choose to accept the offer for part of their investment and continue to grow with the company.



RHC said a combined Fortis and Parkway would result in a group with 68 hospitals and satellite and heart command centres, 37 patient assistance centres, 12,200 beds, 2,700 doctors and 18,000 employees, and a Pan-Asian network.



Other synergies include Parkway having enhanced access into the dynamic Indian healthcare market, a significant growth opportunity for the intended Fortis-Parkway combination.



“There is also a potential to realise significant operational synergies through increased access to talent, cost savings and economies of scale,” said RHC.



Meanwhile, analysts hardly find Fortis’ offer of S$3.80 compelling. A bidding war is very likely on the cards. “Fortis’s offer is made for all shares it does not currently own and is conditional upon the group receiving more than 50% of the acceptances as at the closing date.



“The general offer differs from Khazanah’s partial offer in that shareholders can tender any number of their shares to Fortis,” said Kim Eng Research Pte Ltd analyst Anni Kum.



Kum is not compelled by the new offer. She expects Khazanah to revise the terms of its partial offer and to turn it into a general offer.


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