At the end of 2020, the competition watchdog announced it was opposing the merger, stating it would lead to a monopoly in the Egyptian healthcare market
Cleopatra Hospital Group (CHG) intensifies push to attain relevant authorities’ approval for their acquisition of UAE's Alameda Healthcare Group, in hopes of closing the deal during the first half of 2021.
In a statement to the Egyptian Stock Exchange, CHG states that it has begun preparation to initiate procedures to receive approval from the Egyptian Competition Authority (ECA).
At the end of 2020, the competition watchdog announced it was opposing the merger, stating it would lead to a monopoly in the Egyptian healthcare market.
At the time, Ibrahim El Seginy, Chairperson of the ECA, wrote a letter to Health Minister Hala Zayed stating “the acquisition would raise prices of medical services, decrease their quality, and weaken potential investment opportunities”.
Cleopatra said in their statement that Alameda has invested about 3.5 billion pounds of capital expenditures over the past four years to improve and expand its assets, which may result in generating strong pretax profits, interest, depreciation and depreciation as its future needs for capital expenditures decrease.
According to today's statement, the value of the deal will be determined by assuming Alameda's debt, amounting to about EGP 3.3 billion, in addition to issuing a maximum of 884 million new shares in Cleopatra Hospital Company allocated for the benefit of the shareholders of Alameda Group.
Bloomberg had estimated the deal's value between $450 and $500 million when it broke the news in December 2020.
The new share issuance may reduce the shareholding ratio by a maximum of 35%, as the current number of Cleopatra shares is 1.6 billion shares. Payment for shares is made by issuing debt bonds in favor of shareholders of the Alameda Group, which are convertible into shares issued by Cleopatra Hospital Company, to be fully subscribed by Alameda shareholders.
The evaluation is based on the share price of Cleopatra Hospital at 4.5 pounds per share, noting that the agreed share exchange rate is fixed and will not change with the change of Cleopatra's share price.
Part of the convertible debt securities may be settled into cash shares, according to the mechanism agreed upon in the share purchase contract, and subject to financing that may lead to a reduction in the value of the contribution by a minimum of 25%, or the issuance of only 533 million shares.
