Life struggles
Life Healthcare, the smallest and most timid of SA’s Big Three, has announced a US$1bn purse for acquisitions in Europe. The group is looking to buy a mature business in a market where English is the lingua franca, which includes Germany, the Netherlands and Belgium, according to CEO André Meyer. What could it buy?
A billion is not much for a hospital group and recent deals have not come cheap: Fresenius just paid almost €6bn for Quirón in Spain at a multiple of 11 times EBITDA; and even the diminutive Mater Private in Ireland, which might have made a good match for Life, was quoted at €500m before being taken off the market.
Germany and the UK are already consolidated, Benelux dominated by non-profits and Life wouldn’t be able to afford the big Nordic players like Capio.
Hence the need to consider broadening the net beyond inpatient hospitals. But with all the difficulties Life has experienced integrating groups in Poland and India, it’s unlikely to want to do anything radical.
So Life will get few beds for the price in hospitals and moving beyond its core business presents its own challenge – it looks to be in a tight spot.
As we see it, Life face three pressures: it needs to diversify out of South Africa, whose market looks worse by the minute; after some uninspiring foreign ventures thus far it could do with improving its strike rate; and, finally, the shortage of assets to buy in mature European markets.
Life has always been well regarded in SA, but its good work there risks being undone by the government. Mediclinic and Netcare have already jumped ship; have they taken the lifeboats with them?
We would welcome your thoughts on this story. Email your views to Claude Risner or call 0207 183 3779.
