WRAPUP 3-Crunch time for Australia health M&A deals

* Blackstone quits joint bid for Healthscope

* Sigma slashes profit forecast

* Healthscope shares slip to 6.7 pct below offer price

* Sigma shares fall to 13 pct below offer price
(Adds Blackstone pulling out of bid, paras 6-9)

By Sonali Paul and Michael Smith

MELBOURNE/SYDNEY, July 15 (BestGrowthStock) – Two health care
takeovers in Australia were reaching a turning point on
Thursday with chatter on financing clouding a $1.6 billion bid
for Healthscope (HSP.AX: ) and a profit warning weighing on a
$573 million bid for Sigma Pharmaceuticals (SIP.AX: ).

The sector is hotly sought after for growth in Australia, a
country with an expanding and ageing population where the
government is pushing patients to use private health care.

Elsewhere in the region, Malaysian state investor Khazanah
and India’s Fortis Healthcare (FOHE.BO: ) are battling for
control over hospital operator Parkway (PARM.SI: ), which runs
hospitals in Singapore, Malaysia, India and China.

While the sector is attracting trade and private equity
interest, moves by the Australian government to cut subsidies
for blood tests and drugs have hit pathology providers like
Healthscope and drug groups such as Sigma.

Concerns about the debt market and government moves to
deregulate the pathology industry are weighing on the bids for
Healthscope, sources familiar with the deal told Reuters on

Private equity firm Blackstone Group (BX.N: ) late Thursday
pulled out of a consortium bidding for Healthscope, Australia’s
second-largest hospital owner, one of the sources told Reuters.

“They were unable to reach comfort around price,” the
source said.

Another buyout firm Carlyle [CYL.UL] was also considering
pulling out of the same consortium earlier Thursday. However,
by late Thursday it had decided to stay on board as last-minute
negotiations over financing continued.

Caryle and TPG [TPG.UL] were still expected to bid for
Healthscope by Friday’s deadline, even without Blackstone on
board, the sources said.

The team is up against buyout firm Kohlberg Kravis Roberts
& Co (KKR.AS: )(KKR.N: ), which is expected to bid alone, although
it was earlier in talks with CVC Asia-Pacific about a joint

“The next 24 hours, we will see what happens. All of the PE
guys, particularly Carlyle are very disciplined,” said a senior
banker backing the consortium.

Officials for the TPG consortium and Healthscope declined
to comment, while officials at Carlyle and Blackstone were not
immediately available to comment.

Healthscope shares fell 0.9 percent to A$5.41, trading 6.7
percent below KKR’s offer of A$5.80 a share.

Two sources suggested earlier talk about Carlyle quitting
the bidding team might have been generated to push down
Healthscope’s shares or make KKR less aggressive in its offer.

Investors said they weren’t going to speculate on whether
the bidders might cut their offers, or how Healthscope might

“We’ll just have to wait and see. It’s still massively
higher than before this happened,” said Mark Daniels, head of
equities at Aberdeen Asset Management.

Healthscope shares were trading at A$4.50 before the
company first said in May it had been approached about a


Sigma Pharmaceuticals meanwhile cut its full-year profit
forecast by about 31 percent on Thursday making it tougher for
it to persuade South Africa’s Aspen Pharmacare (APNJ.J: ) to
improve a A$0.55 a share takeover offer.

Sigma’s shares fell 2.1 percent to A$0.475 on more
uncertainty about the outcome of any deal. Australia’s
benchmark index (.AXJO: ) was 0.4 percent lower.

“We’re not sure how it’s going to play out. Maybe they’ll
just sell the generics assets,” said UBS analyst Andrew

Two of the 11 conditions Aspen put on its offer, trimmed
from A$0.60 a share a week ago, could be triggered by the
profit downgrade. The conditions include that there be no
material bad news after June 30, 2010 and that Sigma’s lending
facilities should remain essentially unchanged.

Sigma’s general counsel Sue Morgan-Dethick said the profit
warning had had no impact on the group’s banking covenants.

Investors had been awaiting an update on the outlook after
Sigma warned in June that it would be tough for it to meet its
forecast of A$80 million ($71 million) due to intense
competition in the Australian generics industry, where it is
market leader.

Sigma, advised by Lazard (LAZ.N: ), now expects underlying
net profit between A$53 million and A$57 million for the year
to January 2011.

Aspen is being advised by Investec.

KKR’s adviser is Morgan Stanley. Macquarie Credit Suisse (CSGN.VX: ) 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

The final bank group for the TPG consortium totals around
17 lenders after Bank of Scotland and National Australia Bank
dropped out, the source said.

They include Australia’s three major lenders ANZ (ANZ.AX: ),
Commonwealth Bank of Australia (CBA.AX: ) and Westpac Banking
Corp (WBC.AX: ), as well as international lenders such as Bank of
America Merrill Lynch (BAC.N: ), and Barclays Capital (BARC.L: ),
plus others.
($1=1.131 Australian Dollar)
(Additional reporting by Sharon Klyne; Editing by Valerie

WRAPUP 3-Crunch time for Australia health M&A deals