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New contender for Al Noor

The Mediclinic share price sank on Friday, not through any announcement from that company, rather through another business impacting on a pending deal that may, or may not take place. You will recall from just a few days back that we wrote about a Mediclinic potential tie up with Al Noor, taking a short and concise view of the Al Noor business. What transpired on Friday afternoon was that a rival bid for Al Noor was being considered from suitor NMC Health, another Emirates based business, which also happens to be listed in London.

According to the UK law, and not too dissimilar to the current brewing of the AB InBev bid for SABMiller, NMC Health have until the 6th of November to present a formal bid. The so called put up or shut up rule. According to the Bloomberg article, NMC Health of Abu Dhabi Approaches Al Noor About Counteroffer, Al Noor prefer the Mediclinic offer. If you think about it, for Al Noor shareholders to have access to all the other geographies, Switzerland, the UK and Southern Africa, as well as the Middle Eastern assets, that makes sense. What it does however mean for Mediclinic, and you as the shareholder, either you lose the London listing (not good), with access to cheaper long term funding (a positive if you get it) and/or Mediclinic would have to pay up, which is not great.

Mediclinic is bigger than both the two groups, Al Noor and NMC Health combined. Which means that they possibly have the resources, plus NMC Health have a far higher market rating, that would potentially dilute the Al Noor shareholders with "more expensive" shares, I can see why Al Noor would be attracted to the Mediclinic advances. Rather than throwing a spanner in the works, I suspect this might crystallise the deal making process of Mediclinic. Al Noor have leverage now, that is not great for Mediclinic. The stock was down around 3 percent Friday, against the back of a market up strongly. Mediclinic this morning are up one and one quarter of a percent, perhaps there was an overreaction on Friday.


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