UPDATE 3-Battle on for Healthscope, after 2 more takeover offers

* Two new takeover bids at A$5.80 a share in cash

* KKR among the new bidders – sources

* Operates 44 pvt hospitals & pathology business

* Shares rise 5 per cent but below offer price on
uncertainty
(Adds response from KKR and Tenet, StarMine table; updates
share to close)

By Michael Smith

SYDNEY, May 31 (BestGrowthStock) – A private-equity bidding war
broke out for Healthscope (HSP.AX: ) on Monday as Australia’s
second-largest hospital owner received two more takeover
approaches, both valuing it at A$1.84 billion ($1.56 billion).

Buyout firm Kohlberg Kravis Roberts & Co [KKR.UL] was one
of the new bidders, according to two sources familiar with the
situation. One of the sources said KKR was bidding alone at
this stage.

The second bidder was US-based Tenet Healthcare Corp
(THC.N: ), according to a report on The Australian newspaper’s
website late Monday.

A spokesman for KKR in Sydney declined to comment. A
spokesman for Tenet in Dallas said it was the company’s policy
not to comment on market rumour and speculation.

The latest cash offers of A$5.80 a share topped an existing
offer of A$5.75 a share from a rival private equity consortium
of Blackstone Group LP (BX.N: ), TPG [TPG.UL] and Carlyle
[CYL.UL]. Healthscope announced the receipt of the new offers
but did not say who it came from.

Australia’s ageing population and a government push to
increase private health insurance are benefiting healthcare
firms in the country. Healthscope, which operates 44 private
hospitals in Australia, has grown its core profit by 45 percent
a year over the past five years.
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For a comparative StarMine table:
http://r.reuters.com/tyx37k
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The interest in Healthscope from four of the world’s
biggest private-equity groups also highlights growing appetite
for hospital chains in Asia.

Singapore’s biggest private healthcare group, Parkway
Holdings (PARM.SI: ), received an $835 million offer from
Malaysian sovereign fund Khazanah, pitting it against India’s
Fortis Healthcare (FOHE.BO: ). [ID:nSGE64U016]

Shares of Healthscope, which also runs a pathology business
with facilities in Australia, New Zealand, Singapore and
Malaysia, ended 5 percent higher at A$5.49 after the news of
the offers. Around 6.65 million shares changed hands, five
times the 90-day average volume.

Analysts said the closing of the shares below A$5.80 priced
in the risk that the non-binding offers might not ultimately
result in a deal.

WILLINGNESS TO SELL

A successful bid would make Healthscope the largest private
equity deal in Australia since 2008. The bid battle is being
hailed as the return of buyout firms in Australia after the
global financial crisis put the brakes on their ability to
borrow for the last two years.

Analysts said Healthscope was an attractive target due to
its strong cashflows and property assets. However, an apparent
willingness by management to sell for the right price was one
of the key factors attracting interest, they said.

UBS analysts said Healthscope looked more attractive if its
assets were broken up, though an industry source said on May 20
that the Blackstone-TPG-Carlyle consortium had no plans to
split the businesses.

“With three bidders there, just by sheer numbers, it
increases the likelihood that someone is still going to have a
bid in there at A$5.80 or around that level, post
due-diligence,” UBS healthcare analyst Dan Hurren said.

The offer price of A$5.80 a share was a 10.9 percent
premium to Friday’s closing share price.
The offers were non-binding although both bidders would be
allowed to conduct due diligence, which was expected to take
several weeks.

Healthscope, in a statement, advised shareholders to take
no action and added it would take several weeks to evaluate the
offers.

At least three analysts have put valuations of between
A$5.80 and A$6.70 on Healthscope if the company’s hospitals and
pathology arms were broken up.

Hospitals make up around three-quarters of the group’s
earnings, and analysts have speculated an acquirer could spin
off the pathology business to rivals Sonic Healthcare (SHL.AX: )
and Primary Healthcare (PRY.AX: ).

Macquarie (MQG.AX) and Credit Suisse ) are advising
the TPG and Carlyle consortium, while Blackstone is being
advised by UBS (UBSN.VX: ).

Healthscope is being advised by Goldman Sachs JBWere and
Lazard.

Stock Market Basics

($1=1.180 Australian Dollar)
(Reporting by Michael Smith; Editing by Mark Bendeich and
Muralikumar Anantharaman)

UPDATE 3-Battle on for Healthscope, after 2 more takeover offers