Aleris – too much to handle?

Ambea has bought a really mixed bag of assets in purchasing Aleris’ care division. And Aleris extraordinary service mix and very low margins is a lesson in the need to focus.

Aleris’s care division covers everything from addiction clinics and day centres through to childcare, elderly care, adult care, psychiatry and even refugee centres. Given that Aleris also has cosmetic surgery and orthopaedic centres and was operating across the three main Scandinavian countries, it is easy to see why it was incapable of making serious money.  And many of these facilities are tiny 6-bed affairs stuck out in the Swedish provinces.

It will be interesting to see what Ambea makes of the business. At SEK 2.6bn, Ambea has paid 14 times the previous 12 months EBITA of SEK 146m, a generous amount for an underperforming business.  But the debt-free purchase price does bring sales of SEK 4.66bn. Ambea’s competent management team needs to work out how to make that more profitable.

Aleris’ investors, Investor AB, said in its 2017 annual report that Aleris’ “overall performance remained unsatisfactory” and that Aleris must “decentralise its business” but that Aleris must continue “its work to increase focus on care and healthcare respectively”. That has now been taken to the extreme – Aleris now only has hospitals and imaging arms left.

We’d bet that they will also be sold soon. To Ramsay, perhaps, once it has swallowed Capio?



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