Further to the announcement made by Dallah Healthcare Holding Company (Dallah Health or the Company) on Tadawul dated 30/05/1435H. (corresponding to 31/03/2014G in connection to the signing of a memorandum of understanding on 29/05/1435H. (corresponding to 30/03/2014G) with Bagedo Trading Holding Co. LLC, and Mohamed Ahmed Erfan & Sons Holding Co. LLC (Sellers), about the acquisition of their shares in Bagedo & Dr. Erfan General Hospital Co. LLC (Target) in relation to Dallah Health's proposed acquisition of the full share capital in the Target from the Sellers (Transaction), Dallah Health announces reaching an agreement with the Sellers and the signing of an acquisition agreement on 06/12/1435H. (corresponding to 30/09/2014G) (Share Purchase Agreement).
For purposes of the Transaction the Target has been valued (on a 100% equity basis) at SAR 750,000,000 .
As a consideration for the acquisition of the Sellers' shares in the Target, Dallah Health will issue (7,471,980) new shares to the Sellers representing 15.83% and 13.67% of Dallah Health's entire issued share capital before and after the capital increase respectively, in addition to a cash consideration of SAR 150 million which will be financed through Dallah Health's internal cash flow and representing 20% of the total consideration amount for the Transaction. As a result, this will increase Dallah Health's total number of shares in issue from 47,200,000 shares to 54,671,980 shares post capital increase. The number of new shares in Dallah Health to be issued has been determined using a 60-day volume weighted average share price (VWAP) of SAR 80.30 as of the end of the trading day of Dallah Health's shares on the Saudi Stock Exchange (Tadawul) on 25 March 2014.
The Market Value of Dallah Health Care estimated at SR 5883 Million.
Following completion of the Transaction, the combined shareholding of the Sellers in Dallah Health will be 13.67% and Dallah Health's shareholding in the Target will be 100% of its capital. The acquired shares of the Target shall be registered in the name of Dallah Health and one of its wholly owned subsidiaries.
The following should be noted in respect of the Share Purchase Agreement:
1- The Share Purchase Agreement ends upon completing its conditions on or before 31 March 2015. Dallah Health may terminate the Share Purchase Agreement if any of the Sellers breaches any of their obligations and/or warranties pursuant to the Share Purchase Agreement.
2- There are no related-parties and/or any information or material terms that may influence the price of the share.
3- The Transaction is subject to obtaining (a) the consent of all the official concerned parties including the Capital Market Authority, Ministry of Commerce and Industry and the Ministry of Health; (b) the approval of Dallah Health's extraordinary General Assembly to raise its capital to issue new shares to the Sellers as consideration for obtaining their shares in the Target; and (c) the satisfaction of certain legal and commercial conditions agreed between the parties.
It is also worth mentioning that the Target which has a current paid up capital of SAR 50,000,000, owns the Bagedo & Dr. Erfan General Hospital established in 1981 in Jeddah and has 326 beds and renders comprehensive healthcare services to its patients in addition to other advanced ancillary facilities
The Target achieved revenues of SAR 491.9 million, SAR 502.6 million and SAR 460.4 million in the years 2011, 2012 and 2013 respectively.
Dallah Health will start consolidating the financial statements of the Target starting from the date the Transaction closes.
The Transaction falls within Dallah Health's strategic goals, whereby it aspires to expand its operations, increase its profits and improve its financial results. Dallah Health's rationale and justifications for the Transaction can be summarized as follows:
1- The proposed Transaction is in line with the Company's vision to be a leading healthcare service provider in the Kingdom, as it aims to strengthen the Company's leading position and market share in the healthcare sector by expanding the Company's operations and its operational capabilities in the Kingdom.
2- The proposed Transaction will allow the Company to immediately expand its customer base by acquiring a leading private hospital with a long-standing market presence.
3- The proposed Transaction will give the Company the opportunity to have a presence in the healthcare market in the KSA Western Region
4- The proposed Transaction is expected to result in operational and financial efficiencies of the two companies following the integration of the Target's existing operations under the Company.
Dallah Health will announce any further developments in this matter.