Mediclinic and Al Noor to tie up

Wow, that was exceptionally quick. It seems that the Al Noor and Mediclinic guys worked feverishly to thwart the NMC Health advances announced Friday. This morning there is an announcement that Mediclinic will effectively gain a main board listing on the LSE if this deal would go ahead, and such would be the size and scale of the merged companies that it would be a FTSE 100 constituent, true story. It is not easy to follow, and a little complicated as a result of obtaining the inward listing (again, as a result of exchange controls), the payment of a special dividend to sweeten the deal and raising of money by Remgro in order to achieve this. Remgro will continue to be the anchor shareholder for Mediclinic, they have already indicated that they will vote in favour of the deal, on the Al Noor side the shareholder missing from the equation is the private equity crowd, Ithmar capital who haven't given an irrevocable yet. 28 percent held by Sheikh Mohammed Bin Butti Al Hamed, and 6 percent of Al Noor held by founder and deputy chairman, Dr. Kassem Alom, have agreed to vote in favour.

Quickly, what are the terms here? What would you get as part of a group that would be renamed Mediclinic International Plc? Quite simply, in the new entity you would get 0.625 shares for every one that you hold currently. Here is the announcement: Recommended combination of Mediclinic International Limited and Al Noor Hospitals Group. The combined business revenue split would be as follows, in Dollar terms: 46% from Switzerland, 31% from South Africa and 23% from the UAE. Al Noor, the share price in London is trading currently at 996 pence, the deal price is 8.32 pounds per Al Noor share and a special dividend of 3.28 pounds, effectively 11.60 Pounds, a 16 odd percent premium to where the price is trading right now. And importantly, as the release points out, a 39 percent premium to the 1 October share price, before any deal related activity.

Read it carefully, the important thing to note, as the deal stands right now, this is earnings neutral for Mediclinic and accretive in subsequent years. In terms of the existing shareholders and depending on how much the shareholders of Al Noor are willing to sell to Remgro, Mediclinic shareholders as they exist right now are expected to own around 84 to 93 percent. Shareholder votes on both sides will happen shortly, the combination is expected to be finalised before the year is out and the transaction is expected to happen in the first quarter of next year. That important factor to keep in mind, Al Noor shareholders will be diluted out of sight, you will first get 0.625 shares of Al Noor per Mediclinic share, in the new company that will have access to cheaper funding in order to continue to consolidate the private hospitals space. We endorse and will update you as this goes along, it is a positive for both sets of shareholders.