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Proposed Acquisition of Island Hospital Sdn Bhd
Introduction
Raffles Medical Group Ltd ("RMG" or the "Company") is pleased to announce that it has reached an agreement on 23 October 2004 with the existing shareholders of Island Hospital Sdn Bhd ("IHSB") to acquire up to 100% of the issued share capital of IHSB, subject to contract and all necessary approvals ("Proposed Acquisition").
Information on IHSB
IHSB is a company incorporated in Malaysia with an authorised share capital of RM25,000,000 comprising 25,000,000 ordinary shares of RM1 each, of which 20,000,000 ordinary shares have been issued. Its principal business activity is to operate Island Hospital, which is located in Penang, Malaysia.
Established in 1996, Island Hospital is a leading private hospital in Northern Malaysia, serving a wide geographical region which includes Penang and the northern region of Malaysia and some ASEAN countries. In particular, Island Hospital receives a large number of patients from Medan.
IHSB has 240 beds and provides a comprehensive range of medical, surgical and emergency services to patients. It has 33 full-time medical consultants and 12 sessional consultants.
Purchase Consideration
The purchase consideration for the Proposed Acquisition amounted to RM110 million (S$48.2 million) in cash for 100% of IHSB, and was arrived at on a willing buyer-willing seller basis after taking into consideration, inter alia, the financial performance of IHSB.
Funding
As at 30 June 2004, RMG has cash and investment in commercial notes totalling S$35.0 million. RMG proposes to fund the Proposed Acquisition from internal resources and external borrowings.
Rationale for Proposed Acquisition
RMG currently owns operations in Singapore and Hong Kong, with a Representative Office in Jakarta; and representation in many other countries like Bangladesh, Sri Lanka, Dubai, Abu Dhabi, Bahrain and Korea. The Proposed Acquisition will allow RMG to further broaden its geographical presence through the establishment of hospital operations immediately in Penang, Malaysia.
RMG and IHSB have complementary geographical markets and products/services offering. RMG also believes that there is potential for marketing and promotional synergies as well as cross referrals of clients and patients. The Proposed Acquisition is a step towards transforming RMG into a regional provider of healthcare services.
Conditions Precedent
The Proposed Acquisition is subject to and conditional upon, inter alia;
(a) approval by the Board of Directors and the shareholders of the Company, if required; and
(b) the receipt of all requisite approvals and consents from the relevant authorities, including the Malaysian Foreign Investment Committee and Ministry of Health for the transaction.
The Proposed Acquisition is expected to be completed within 6 months.
Financial Effects
The Proposed Acquisition is expected to be earnings accretive to RMG from its first year of operation. As the transaction is not expected to be completed by 2004, the Proposed Acquisition will not have any financial effect on RMG's earnings for FY2004.
For illustrative purposes only, the proforma effects of the Proposed Acquisition, assuming 100% of IHSB is acquired, is set out below. The proforma financial effects have been prepared based on the audited consolidated financial results of RMG and IHSB ("IHSB Accounts") for the financial year ended 31 December 2003 ("FY2003"). The proforma financial effects are purely for illustration purposes only and are not indicative of the actual financial effects of the Proposed Acquisition on RMG or of the financial performance of RMG and/or IHSB for the current financial year.
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