Manipal bid to buyout Medanta for Rs 5800 crore: Report

MUMBAI: Cardiologist Naresh Trehan owned Medanta buyout is likely to conclude as TPG and Temasek-backed Manipal Hospitals has recently submitted a binding offer of Rs 5800 crore to acquire the hospital. According to a recent media report, the buyout closes with Manipal's offer, ending months of negotiation and due diligence.

As per a report in the Economic Times, a decision is likely soon as the Medanta management is in a process of evaluating the offer. Within a couple of weeks, the board will meet regarding the same.

"As the due diligence by Manipal is already over, the documentation work will be started once Medanta management accepts the Rs 5,800-crore offer," sources told the daily.

Manipal owns 10 multi-speciality hospitals, five teaching hospitals and numerous fertility clinics and is looking for a strong base in the north where Medanta's footmark is widely focussed.

In February, after losing out on the Fortis deal, the Manipal Group backed by TPG made moves toward acquiring Gurugram Based Medanta Medicity by entering into exclusive negotiations with founder Dr Naresh Trehan and other investors.

Private Equity firm, Blackstone is financing Manipal's chairman, Ranjan Pai with Rs 3,200-crore ($450 million) funding commitment. Pai owns 60% of Manipal Hospitals through the promoter holding company, with TPG and Temasek holding the rest. The duo will also participate in the part-funding.

TPG had invested about $146 million in February 2015 in Manipal Education and Medical Group(MEMG) and has a 22% stake in the entity. Singapore's investment company Temasek owns 18% of both Medanta and Manipal.

Competing against them, KKR's hospital platform Radiant Life Care contested for the bid. However, KKR-Radiant has not submitted any formal offer yet.

Medical Dialogues had earlier reported that joining the fray to get a stake in the Gurugram based Medanta Medicity, the US-based investor firm KKR recent made a bid. KKR had approached the existing investors and the management for the stake sale after the exclusive agreement period between Trehan's Medanta and Manipal Hospital backed by investors TPG Capital and Temasek had expired.

Also Read: Manipal-TPG exclusive agreement period expires; KKR initiates bid for Medanta: Report

Manipal's proposed entry will also see the complete exit of private equity fund Carlyle from its five-year-old investment in Medanta. The fund had acquired a 27% stake from US-based Avenue Capital in 2013 at a valuation of $600 million (Rs 3,540 crore in 2013).

Medanta's existing investor Carlyle will decide on the offer by next week, suggests the media report.

Founder, Naresh Trehan is likely to retain a minority stake although the details are yet to be finalised. Trehan, his family members and co-founder Sunil Sachdeva own 55% of the company. Founded in 2009, Medanta operates super speciality hospitals and clinics in Gurgaon, Lucknow, Indore, Ranchi and Sri Ganganagar.

Medanta posted an Ebitda (earnings before interest, taxes, depreciation and amortisation) of Rs 240 crore in the Fiscal Year 2019, up 8 per cent from Fiscal Year 2018. The Rs 5800 crore valuation will be an Ebitda multiple of about 24 times, sources told ET.

Also Read: TPG-Manipal enter into Exclusive talks to Acquire Medanta- Report