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Who are the future players of Australian healthcare M&A?
With growing value to be found within the Australian healthcare mergers and acquisition landscape, a report has named companies which may contribute to the sector’s increased value.
Grace Ormsby
MinterEllison’s M&A Outlook: Australian Healthcare 2018 expects “positive sentiments behind global healthcare M&A to keep feeding through to the Australian market,” and has listed a number of potential deal targets, acquirers and private equity sales.
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The report outlined three types of likely buying party reasonings: industry leaders desiring access to additional growth, Chinese companies looking for skills technology and ‘know-how’, or private equity groups which enjoy healthcare’s predictable cashflows.
Potential deal targets for the next 12 months and beyond include Healthscope with its lucrative hospital sites previously estimated to be worth $1.2 billion, Primary Health Care, Integral Diagnostics, Japara Healthcare, and residential aged care home providers Estia Health and Regis Healthcare.
Reasons that may be given for upcoming sales is an investor dislike of conglomerates driving break-ups and spin-offs, rich valuations and perception that the bull market could be ending, according to the report.
Bucking the trend of off-loading, potential acquirers of targeted sale companies could include Ramsay Healthcare as the dominant healthcare player in the Australian market, financial service provider Moelis Australia, and diagnostic imaging company Capitol Health.
Notably, Australian financial organisations have acquired around one third of all healthcare industry assets when an Australian acquirer has been involved, and lends itself to Moelis Australia making the potential acquirer list into the future.
MinterEllison has also considered private equity sales for the report, suggesting National Dental Care may be put up for sale when “more favourable sentiments return to the [dental] sector.”
Sun Doctors, PAFtec and Estia Health may also attempt to offload assets, with Home Care Holdings potentially taking advantage of industry consolidation.
The report also highlighted “significant activity in the last five years in the vitamins and nutraceuticals sub-sector” and the recent acquisition of a number of brands by Chinese buyers.
Listing off a number of smaller players in the sub-sector such as Blackmores Limited, Probiotec, Star Combo Pharma and Vita Life Sciences, as well as infant formula providers such as ViPlus, the report expects these companies to continue to be attractive targets for foreign investment.
Lawyers Weekly recently reported on Australia’s position in an increasingly strong global health M&A landscape.
