Radiant Life Care, backed by private equity major KKR, on Monday said it will acquire a majority stake in Max Healthcare through a merger to create an entity with valuation of ₹7,242 crore.
“The combination of Radiant and Max Healthcare will create the largest hospital network in North India,” Max India informed the stock exchange. The merged entity will figure among the top three hospital networks in India by revenue and the fourth-largest in India in terms of operating beds, the statement added.
It will operate over 3,200 beds through 16 hospitals across India. The acquisition will be undertaken through a series of transactions. This will include Radiant’s purchase of a 49.7% stake in Max Healthcare from South Africa-based hospital operator Life Healthcare in an all-cash deal, followed by the demerger of Radiant’s healthcare assets into Max Healthcare which will result in KKR and Radiant promoter Abhay Soi together acquiring a majority stake in Max Healthcare.
The companies said that KKR will also acquire an additional stake of 4.99% in the merged entity from Max Promoters, funded primarily from KKR Asian Fund III.
The shareholding of the combined entity will see 51.9%, 23.2% and 7% (post sale of 4.99%) being held by KKR, Abhay Soi and Max Promoters respectively, with the rest being held by public and other shareholders.
Non- healthcare units
Max India will demerge its non-healthcare businesses (comprising Max Bupa and Antara Senior Living) into a new listed entity. Shareholders of Max India will receive one share of ₹10/- each of this new entity for every five shares of ₹2/- each that they hold. This entity will be listed on the stock exchanges.
Following this, Radiant’s healthcare assets will be demerged into Max Healthcare which will then undertake a reverse merger with Max India to create the merged Max Healthcare. As a result, shareholders of Max India will receive 99 shares of the merged entity of ₹10 each for every 100 shares of ₹2 each held.
Once the deal is closed, Mr. Soi will lead the combined company as its chairman. The merged entity will continue to use the current brand name Max Healthcare, with appropriate adjustments to its logo, the statement said.
The combined business, the statement said, is expected to provide significant growth potential and compelling business synergies. “By providing best-in-class patient care, the combined business plans to address India’s growing demand for quality medical treatment.”
Analjit Singh, founder and chairman emeritus of the Max Group, said, “The merger offers significant growth potential with revenue and cost efficiencies to be extracted. Both Max and Radiant possess complementary sets of capabilities in running healthcare establishments and KKR brings with it extensive global experience and expertise in healthcare investments as well as capabilities in prudent financial management and efficient capital allocation.”
Sanjay Nayar, Member & CEO of KKR India, said, “The country’s private hospital market has grown rapidly in recent years, and we expect demand for quality healthcare to outpace overall economic growth as Indians demand better quality care.
“The combined business will enjoy a leadership position among the attractive metros of Delhi and Mumbai.”
