Blackstone signs binding agreement with TPG for Care Hospitals

Global private equity firm Blackstone has signed a binding agreement with TPG to buy 70% stake in Care Hospitals. The agreement values the India and Bangladesh operations of the hospital chain at about $800 million, according to a report in The Economic Times. This is Blackstone’s first investment in hospital chain in India. TPG is expected to retain the balance 30% stake. The transaction with Blackstone is believed to have been concluded at a lower than expected valuation.

Max deal canceled:

Earlier, Max Healthcare had signed a term sheet with TPG for the sale. Max Healthcare has moved the Bombay High Court against TPG, after the private equity firm favoured Blackstone’s offer over Max’s takeover bid. Blackstone is believed to have, has offered a price that is 15-20 per cent higher than Max Healthcare’s offer.
The Max offer valued Care Hospitals at Rs 3,700 cr, excluding Bangladesh assets.

Conditional offer:

The Abhay Soi-led Max had already given a firm offer to TPG within the stipulated six-week window for a buyout, which also included an option on the Bangladesh assets. Max had said it wanted to run the Bangladesh operations for two years before making an offer to buy it. The Care Hospitals’ valuation was pegged at Rs 5,500-6,500 crore.
Blackstone has been the sole contender for Care last December after Temasek-backed Shears backed out to look into the deal of Manipal Hospitals.

Arbitration report:

The Bombay High Court, on May 3, appointed retired justice SJ Kathawalla as the sole arbitrator in the dispute. The arbitrator has to decide on the case within 15 days. According to reports, Blackstone believes the arbitration is unlikely to have any impact on the deal.