MUMBAI: Dr. Azad Moopen-founded Aster DM Healthcare and Hyderabad-based Quality Care India (Care Hospitals), which is backed by private equity giants Blackstone and TPG, have agreed to merge, creating India's third-largest corporate hospital chain, after Apollo and Fortis. The merged entity, Aster Quality Care, will have a total capacity of over 10,150 beds spread across 38 hospitals.
In an exchange filing Friday, the Dubai and Kochi-based Aster said the combined entity will have a network of 38 hospitals offering over 10,150 beds spread across 27 cities making it one of the top three hospital chains in the country.
Aster Quality Care will be jointly controlled by Aster promoters -- the Moopen family -- and Blackstone, holding 24 percent and 30.7 percent ownership, respectively.
Dr Azad Moopen, currently Executive Chairman of Aster will continue at the same position at Aster Quality Care, while Varun Khanna, group managing director of Quality Care, will be the group managing director and chief executive of the new entity, Aster Quality Care, said Aster.
"As part of the deal, Aster will acquire 1.9 crore shares of Care Hospitals at Rs 445.8/share from Blackstone and TPG’s Centella by issuing 1.86 crore of its own shares to the shareholders of Care Hospitals at Rs 456.33 a share. This will result in Aster shareholders holding 57.3 percent in the combined entity and Care shareholders holding 42.7 percent in the merged entity," said Aster.
Aster will also move its registered office from Karnataka to Telangana as part of the merger.
"The merger is expected to result in significant strengths including scale, diversification, enhanced financial metrics, synergies, increased growth potential, and backing of marquee private equity investors. The transaction values Aster at 36.6x FY24’s operating income, which is 45 percent higher than the multiples ascribed to Care, that is to say 25.2x operating income in FY24," it said.
Aster reported consolidated net sales of Rs 1,086.44 crore, down 67.24 percent on-year in the September quarter. On a standalone basis, its net sales stood at Rs 604.68 crore, up 18.75 percent.
Aster Quality Care will have a combined portfolio of four leading brands -- Aster DM, Care Hospitals, Kims Health and Evercare.
Founded in 1987 by Dr Moopen from a single clinic in Dubai, Aster has since expanded in the Gulf region and India, operating dozens of hospitals as well as hundreds of clinics and pharmacies in the GCC markets. Earlier this year, the company had separated its business in the Gulf from the India business.
“Aster DM Quality Care is poised to become one of the largest healthcare players in the country, setting new benchmarks in patient-centric care, innovation, and accessibility. By combining the strengths of two pioneers, we are not only expanding our footprint but also creating a transformative force capable of reshaping the healthcare landscape," said Dr Moopen.
"The integration of extensive networks of Aster and Quality Care with deep operational expertise with backing from Blackstone and TPG will enhance our ability to deliver world-class healthcare services, drive innovation, and improve patient outcomes. The merger will also provide our medical professionals with an opportunity to cater to higher and diverse patient inflows," he added.
Amit Dixit, head of Asia at Blackstone, said they will help the new entity grow the platform, expand the footprint, and develop it into a world-class healthcare institution.
Following the deal announcement, Aster shares closed 2.3 percent higher at Rs 500.55 on the BSE whose benchmark rose nearly 0.8 percent.