UAE's NMC Health receives four serious bids to buy it
Those interested in UAE's biggest hospital operator include Mubadala and Hussain Sajwani
Dubai: There are four interested parties in the fray to acquire NMC Health with the deadline set to end today for submissions. One or two more potential investors could still throw in their bids in the few hours left, according to informed sources.
Among the four bids, one is from Abu Dhabi investment powerhouse Mubadala, another is from Hussain Sajwani of Damac, and a third from GKI, an Italian healthcare focused firm.
Hussain Sajwani has been a canny investor, most recently acquiring luxury label Roberto Cavalli. He has been buying NMC Health shares from the open market.Image Credit: Gulf News Archive
As per London Stock Exchange rules, there’s a 28-day window for official bids to be made after a listed company first announces that a bid was made,” said a senior source at a local bank. “It’s been 28 days since NMC announced that it had received bids from KKR and GKI. KKR has since said it’s no longer interested.
“But there are other parties who definitely are – NMC remains the biggest healthcare operator in the UAE; it has regional aspirations and it is profitable.
“The debts of $2 billion are what is going to be an issue; plus the lack of clarity on the exact holdings of its three principal shareholders, including that of the founder Dr. B. R. Shetty.”
LSE requirements
All takeover bids need to be formally submitted to NMC by close of business on March 9. “You never know – a new offer could still be made,” said another source.
Incidentally, NMC Health shares on London Stock Exchange are still in temporary suspension. But outside of the stock exchange, the company’s shares are being actively sought.
The fortunes of NMC Health could well be decided by Abu Dhabi powerhouse Mubadala, one of four bidders in the fray to take over the ailing hospital operator.
In recent days, news came out that a “custody” bank, which was holding NMC shares pledged to it by one of the principal shareholders, had sold some of it.
It is believed that they were sold for 12.5 pounds a share, above the 10 pounds that the shares were quoted on LSE before they were suspended.
Since December, there have been other instances of banks selling off such blocks of shares belonging to Dr. Shetty and former vice-chairman Khaleefa Butti Omair Yousif Ahmed Al Muhairi, and Saeed Mohamed Butti Mohamed Khalfan al-Qebaisi.
It is now believed that the three own less than 10 per cent of shares in NMC from the once lofty holdings of 40 per cent plus.
“A lot of NMC shares are with custody banks and these are being sold off block by block,” said a shareholder. “Some serious investors are mopping up these shares in the open market. As per London Stock Exchange rules, anyone who has bought 1 per cent or more has to officially make it known.”
Operationally strong and yet…
While all of the attention has been cornered by NMC’s shareholders and potential buyers, less of it has been paid to how NMC is managing its day-to-day operations. “So far, none of the steady stream of news has affected NMC on operations – February proved an exceptionally good month and March looks the same,” said a senior staff member at one of the hospitals.
“There are still recruitments being done to ensure the best doctors are available to treat our patients.”
But the February payment of salaries is yet to be completed – “About 85-90 per cent have got their salaries, and that includes all of the key operational staff,” said a source. “The rest - senior executives and specialist doctors - will soon get theirs as well.”
There are still problems that need resolution, which is why NMC has asked its lender banks for a standstill on its debt obligations.
Michael Davis, interim CEO, has a lot on the plate. But first up, he will need to reach a workable solution with the lender banks.
Restore line of credit
“NMC Health needs access to funds to handle its month to month operations,” said a banker. “But given the current situation, the funds generated are getting diverted to the banks and that’s casting a huge shadow on operations. It’s the reason why NMC has called for a debt standstill – it needs urgent access to the money it generates. Credit lines must be restored.”
The interim CEO, Michael Davis, is reportedly in touch with government agencies in Abu Dhabi and all of the lenders to work out a compromise solution. Because the last thing anyone wants to see happen is NMC being affected across its operations because of the fund squeeze.
“The 16,000 staff and 6.5 million patients a year who visit NMC’s UAE facilities need to be assured – it’s for the banks to do so,” said a company official. “It’s important for the UAE’s entire healthcare sector.
"The debts that NMC took on and the sukuk it issued got NMC and the UAE international exposure after it became part of the FTSE 100. The UAE investment environment could be marred if NMC is allowed to fail."
With US futures trading limit down, most stocks are trading lower. The following represents mostly stocks with specific catalysts
Gapping down
In reaction to disappointing earnings/guidance:
- FANG -25.8% (cut guidance and operations), SOHU -2.7%, KLXE -0.8%, ANAB -0.6%
Select ETFs showing weakness:
- XLE -17.1%, XLF -8.6%, XLI -7.5%, IWM -7.3%, XLK -7.2%, SPY -6.4%, DIA -6.4%, QQQ -6%
Select oil/gas related names showing early weakness:
- HAL -23.8%, USO -23.3%, SLB -22.6%, BP -19.7%, XOM -14.3%, RDS.A -13.2%, TOT -12.1%, PSX -9.1%
Other news:
- OVV -34.3% (files mixed securities shelf offering)
- DVN -28.6% (files mixed securities shelf offering)
- BMY -7% (after topline results from ELOQUENT-1 did not meet primiary endpoint)
- AYX -6.8% (postpones Analyst Day previously scheduled for March 10, citing COVID-19 concerns)
- ARDX -4.2% (says it's on-track to submit NDA for Tenapanor for the control of serum phosphorus in mid-2020)
Analyst comments:
- BUD -5.2% (downgraded to Neutral from Outperform at Credit Suisse)
- GILD -3.1% (downgraded to Outperform from Top Pick at RBC Capital Mkts)
Gapping up
In reaction to strong earnings/guidance:
- CYOU +3.1%, SOGO +1.3%, THO +0.5%
M&A news:
- WLTW +1.3% (Aon and Willis Towers Watson to combine in an all-stock transaction with an implied combined equity value of approximately $80 billion)
Select COVID-19 related names showing strength:
- INO +23.8%, CODX +7.8%, MRNA +3.8%, LAKE +0.5%, .
Other news:
- KALA +12.3% (announces statistically significant results for primary and key secondary endpoints in Stride 3 clinical trial evaluating Eysuvis for signs and symptoms of dry eye disease)
- TLT +8.8% (10 yr yield hits record low)
- TGNA +2.9% (WSJ report that private equity firm Apollo Global Mgmt has offered to acquire TGNA for $20/sh)
Analyst comments:
- N/A
Early premarket gappers
- Gapping up:
- KALA +14.6%, TLT +7.6%, ARDX +5.4%, SOGO +1.3%, CYOU +0.7%, TGNA +0.6%, LAKE +0.5%, THO +0.5%
- Gapping down:
- OVV -27.2%, DVN -25.3%, FANG -23.8%, USO -22.3%, HAL -21.6%, SLB -17.8%, BP -17.1%, XLE -14.1%, XOM -12.1%, RDS.A -12%, TOT -10.8%, XLF -7.6%, XLI -6.8%, XLK -6.5%, SPY -6.2%, PSX -6.2%, IWM -6%, QQQ -5.9%, DIA -5.7%, AYX -5.4%, SOHU -2.1%
>>> Up
* Admiral Raised to Neutral at JPMorgan; PT 2,125 pence
* BBVA Raised to Overweight at JPMorgan; PT 5.45 euros
* BNP Paribas Raised to Overweight at JPMorgan; PT 53 euros
* Chr. Hansen Raised to Buy at Handelsbanken; PT 575 kroner
* Deutsche Boerse Raised to Hold at Berenberg; PT 155 euros
* Direct Line Raised to Overweight at JPMorgan; PT 350 pence
* dormakaba Raised to Hold at SocGen; PT 565 Swiss francs
* Geox Raised to Hold at Kepler Cheuvreux; PT 75 euro cents
* Henkel Raised to Outperform at RBC; PT 94 euros
* Hill & Smith Raised to Buy at Berenberg; PT 1,610 pence
* Italgas Raised to Buy at MainFirst; PT 6.40 euros
* Kion Raised to Buy at Deutsche Bank; PT 54 euros
* Kion Raised to Buy at HSBC; PT 64 euros
* Piraeus Bank Raised to Neutral at Goldman; PT 1.85 euros (+)
* Ryanair Raised to Buy at MainFirst; PT 14.50 euros
* Ryanair Raised to Outperform at Credit Suisse; PT 14.16 euros (+)
>>> Down
* AB InBev Cut to Neutral at Credit Suisse; PT 58 euros
* Anglo American Cut to Outperform at RBC; PT 2,300 pence
* Atlantia Cut to Neutral at Citi; PT 21 euros
* Borr Drilling Cut to Hold at Kepler Cheuvreux; PT 15 kroner
* Catena Raised to Buy at Kempen & Co; PT 390 kronor
* Cofinimmo Cut to Neutral at Kempen & Co; PT 156 euros
* Continental AG PT Cut to 90 euros at Deutsche Bank
* Eni Cut to Market Perform at Bernstein; PT 11 euros
* Eni ADRs Cut to Market Perform at Bernstein; PT $25
* Equinor ADRs Cut to Market Perform at Bernstein; PT $17
* Equinor Cut to Market Perform at Bernstein; PT 150 kroner
* Repsol Cut to Market Perform at Bernstein; PT 11 euros
* Schouw Raised to Buy at SEB Equities; PT 600 kroner
* Shell Cut to Market Perform at Bernstein; PT 1,700 pence
* Shell ADRs Cut to Market Perform at Bernstein; PT $44
* Standard Chartered Cut to Reduce at AlphaValue
* TAG Immobilien Downgraded to Hold at Hauck & Aufhaeuser; PT EU24 (+)
* Total Cut to Market Perform at Bernstein; PT 36 euros
* Total ADRs Cut to Market Perform at Bernstein; PT $40
* Wereldhave Cut to Hold at ABN Amro Bank
>>> Initiation
* AFC Ajax Rated New Buy at Berenberg; PT 32 euros
* Bidstack Group Rated New Buy at Stifel; PT 8.50 pence (+)
* Borussia Dortmund Rated New Buy at Berenberg; PT 12 euros
* Juventus Rated New Hold at Berenberg; PT 80 euro cents
* OL Groupe Rated New Buy at Berenberg; PT 3.85 euros
* Zalaris Rated New Buy at SpareBank; PT 50 kroner
>>> Call
* Accor, IHG Estimates Cut But Jefferies Remains Buy on Both (+)
* Luxury-Goods Industry Having ‘Annus Horribilis,’ Jefferies Says (+)
* Berenberg’s Soccer-Stock Picks Are Those With Strong Academies
* Deutsche Boerse ‘Relatively Sheltered’ From Virus: Berenberg
* *EUROPEAN SOFTWARE SECTOR RAISED TO OVERWEIGHT AT MORGAN STANLEY
* *EUROPEAN AUTOS SECTOR CUT TO NEUTRAL AT MORGAN STANLEY
* H&M Estimates Cut on Coronavirus Impact at Citi
* Henkel’s Growth Agenda Welcomed, Upgraded to Outperform: RBC
* Hill & Smith Among Berenberg’s Buy Ideas in U.K. Capital Goods
* Pictet Wealth Cuts Equities and Europe High Yield to Underweight
* Oil Stocks to Face Substantial Earnings Downgrades: Berenberg