Mumbai: The much anticipated Medanta-Manipal deal worth Rs 5800 crore has come to a halt. The deal failure is reportedly the result of valuation mismatch.
This is Manipal Group’s second setback after it was earlier outbid for Fortis in 2018. Manipal Group backed by TPG made its move toward acquiring Gurugram Based Medanta Medicity by entering into exclusive negotiations with founder Dr Naresh Trehan and other investors earlier this year. However, as per recent media accounts, the group has once again failed to crack the deal due to valuation mismatch.
Medical Dialogues had earlier reported that Manipal’s proposed entry would have seen 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).
It was reported that Founder, Naresh Trehan was 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.
The TPG-Manipal together commenced exploratory talks with the owners of Medanta in October 2018 to buy a majority stake in the hospital chain. However, it is learnt that Manipal could not secure finances to close the deal and also the valuation mismatch led to the deal failure.
People aware of the matter told Live Mint., “Manipal had two strong investors who were keen to fund them, but there was a valuation mismatch. The investment has to make sense for all parties.”
Had Manipal been successful in bringing in the requisite amount, it would have been parallel to the country’s prestigious Apollo Hospital in terms of bed strength. However, the failure of the deal brings to halt, the dream of pan India expansion. Acquiring Medanta would have raised Manipal’s bed strength from 6,000 to 9,000s. Moreover, Manipal-Medanta would have been at 1,800 beds in the NCR region.