HCA, the largest U.S. hospital chain by revenue, is considering a bid for Australian hospital company Healthscope, according to media reports.
The Nashville-based hospital operator has tapped Deutsche Bank as its financial adviser, the reports said, citing sources familiar with the situation. A sale could bring in up to $5 billion for Healthscope's private equity owners, TPG and the Carlyle Group, which have owned Healthscope since 2010.
“Discussions happen all the time in healthcare,” an HCA spokesman said in an e-mail. “Sometimes they lead to something, and many times they don't. For that reason, we've found it's best not to talk about discussions we may or may not be having unless or until we have an agreement to announce.”
Healthscope is one of Australia's largest private hospital operators and also provides pathology services throughout Asia.
China's Shanghai Fosun Pharmaceutical and Malaysia's IHH Healthcare are also reportedly weighing bids.
HCA already has operations in the U.K., where its six private facilities contribute about 3% of the company's total revenue. Earlier this month, however, U.K. antitrust regulators recommended that HCA divest two of its hospitals in Central London after arguing that HCA owns more than half of the available beds in the city and charges higher prices than competitors. HCA said it will fight the order.
The news that HCA could be planning to expand into Australia boosted shares about 1.5% Tuesday morning.
An Australian buy could be a platform for the chain to expand into the Pacific-Rim and would be an overall net positive, Darren Lehrich, an analyst at Deutsche Bank, wrote in a research note.
But HCA typically takes “a careful and prudent approach to deals,” UBS analyst A.J. Rice wrote, and wouldn't jump on a deal without weighing it against other uses of cash such as share buybacks and debt reduction.
HCA is not the first U.S. chain to consider buying Healthscope. During Healthscope's sale process in 2010, Dallas-based Tenet Healthcare Corp. confirmed that it was in talks with the company but dropped its bid six days later because it was unable to “convey to shareholders the potential value” of a deal.
Follow Beth Kutscher on Twitter: @MHbkutscher
