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Spire Healthcare
18 June 2007

Cinven reaches agreement to acquire BUPA’s hospitals for £1.44bn (€2.13bn)

European private equity firm, Cinven, today announces it has reached an agreement to acquire the hospital operations and assets of BUPA for a total consideration of £1.44bn (€2.13bn).

BUPA’s hospitals group (“the Group”) is the third largest provider of private medical services in the UK. The Group’s operations include 1.544 acute beds and assets comprise 25 acute care hospitals located throughout the UK, and a treatment centre in Redhill. Employees total approximately 5,800 of which 3,300 are clinical staff. 2007 revenues are forecast to be £457m with normalised EBITDA* of £100.2m (2006 comparable numbers are £420m and £92.2m, representing a 9% year on year growth) The Group’s primary payors are private medical insurance companies which account for over two thirds of the revenues, with services also provided to the NHS and self-pay clients.

It is Cinven’s intention that the Group invests in the services and assets of the business to drive organic growth. Capital expenditure will be increased ahead of prior years’ levels of investment to enable further growth of the Group and to meet the needs of its customers and to continue to provide the highest quality medical care. Cinven has significant experience in the private healthcare market. It currently owns Partnerships in Care (“PiC”), the UK’s leading provider of specialist mental health and related services which operates 940 beds in its 17 facilities around the UK. Cinven’s strategy for PiC has been one of continued investment as it has expanded its portfolio by over 40% in two years and expanded into new markets.

Cinven has unrivalled expertise in the independent hospital’s sector as a result of its investments in Générale de Santé (the leading private acute care hospital provider in France) and General Healthcare Group. Cinven combined General Healthcare with Amicus in 1997 in what was Europe's first £1bn leveraged buyout to create the clear market leader in the UK private healthcare sector. Broader geographic coverage and a more comprehensive service improved the combined group's offer to its main clients and helped spread best practice. These initiatives along with increased capital expenditure drove a successful organic growth programme. Cinven exited this investment in 2000.

UBS acted as an exclusive financial advisor to Cinven on the transaction and the debt facilities have been underwritten by HBoS and RBS.

Citigroup Global Markets Limited acted as exclusive financial adviser to BUPA on the transaction.

The transaction is subject to certain conditions including ECMR approval.

(*) EBITDA is normalised to take reflect the stand alone operating model and therefore differ from the results disclosed in BUPA’s annual report and accounts for 2006

Simon Rowlands, partner at Cinven, said today:

“We are pleased to have been able to acquire this leading provider of acute healthcare services. The portfolio of hospitals acquired is of a very high quality, staffed by dedicated and skilled clinicians and medical staff.

As with our investment in Partnerships in Care, and previous investments in the healthcare sector, Cinven will be seeking to invest significantly in the operations and skill-sets within the business over the coming years in order to drive organic growth and broaden the Group’s services offering. The Group will also be seeking new sources of revenue through both its traditional PMI customers as well as working in partnership with the NHS, as evidenced by the ECS outsourcing contracts won recently.''

Val Gooding, Chief Executive of BUPA, added:

“Cinven has considerable experience in the sector which was an extremely important consideration. Equally important was their commitment to high-quality healthcare, the growth of the business and the wellbeing of patients, staff and the hospitals' other stakeholders.”

 

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