Aster DM Healthcare Ltd. is close to finalizing a deal to merge with Quality Care India Ltd., backed by Blackstone Inc., creating one of India's largest hospital chains. Shareholders of Aster are expected to own approximately 57% of the new entity, while Quality Care investors will hold 43%. An announcement could come as soon as Friday.
Aster DM Healthcare's stock surged 5% following the announcement of plans to acquire the remaining 13% stake in Aster Aadhar Hospital, increasing its ownership to 100%. The acquisition will be executed in two tranches, with completion expected by December 31. The company aims to expand its presence in tier-II and tier-III cities to meet growing demand.
Merger talks between Aster DM Healthcare and Quality Care India, owned by Blackstone, have reached their final stages, with a share swap deal expected to be finalized soon. The merged entity will be named Aster DM Quality CARE, with Blackstone anticipated to hold a majority stake, while TPG and the Moopen family will retain minority stakes.
Aster DM Healthcare reported a robust 51% YoY growth in Q2 consolidated EBITDA, reaching Rs 2.2 billion, surpassing estimates by 18%. The company’s EBITDA is projected to grow at a 27% CAGR from FY24-27, driven by improved margins and bed additions. Prabhudas Lilladher maintains a 'Buy' rating with a revised target price of Rs 500, valuing the stock at 26x EV/EBITDA for FY26E.
The healthcare sector in Kerala is experiencing significant consolidation, with major acquisitions such as Quality Care's purchase of KIMSHealth and Caritas Hospital's acquisition of Matha Hospital. While this trend promises improved facilities and job opportunities, concerns about rising costs for patients persist. Experts suggest that these changes could position Kerala as a healthcare hub, enhancing medical tourism and attracting foreign investment, though small hospitals may struggle to survive without policy support.
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