| Tue 5 Jun 2001, 0:00 | | Netcare - Acquisition Of Medicross Healthcare Grou |
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NETWORK HEALTHCARE HOLDINGS LIMITED
(Registration number 1996/008242/06)
(Incorporated in the Republic of South Africa)
("Netcare")
ACQUISITION OF MEDICROSS HEALTHCARE GROUP (PTY) LIMITED ("MEDICROSS") AND
ADDITIONAL INVESTMENT IN THE AMPATH TRUST
1. Introduction
Shareholders are advised that Netcare has reached agreement with Fedsure
Healthcare (Pty) Limited ("Fedsure Health") in terms of which Netcare will
acquire Medicross ("the Medicross acquisition") and an effective additional
13% investment in the Ampath Trust ("the Ampath acquisition") (collectively
"the acquisitions"). The effective aggregate acquisition cost will be
R177,75 million.
2. The Medicross acquisition
2.1 Nature of business of Medicross
Medicross is a multi-disciplinary healthcare provider network consisting of
55 Family Medical and Dental Centres (including 12 satellite centres)
located throughout South Africa. Medicross, through its contractual
arrangements with selected service providers, manages and administers a wide
range of primary healthcare services including medical, dental and pharmacy
services as well as operating day clinics.
2.2 Rationale for the Medicross acquisition
The acquisition of Medicross is in line with Netcare's strategy of investing
in key units of the healthcare value and supply chain, which presently
include, inter alia, Netcare's core hospital business; emergency services;
renal care; management services to pathology and radiology; nursing
education and training; hospital management; IT subcontracting services; e-
commerce; and travel clinics. The Medicross acquisition complements
Netcare's existing portfolio of healthcare related investments.
2.3 Terms of the Medicross acquisition
Fedsure Health will dispose of the entire issued share capital of and claims
on loan account against Medicross for an effective consideration of R128,5
million payable on 30 October 2001.
3.The Ampath acquisition
3.1 Nature of business of the Ampath Trust
The Ampath Trust conducts business as a provider of specialised facilities
and comprehensive management and administrative services to a network of
high technology laboratories and operations management centres in and around
South Africa.
3.2 Salient terms of the Ampath acquisition
A subsidiary of Netcare presently holds an effective 37% interest in the
Ampath Trust, with 37% being held by other investors ("the other
investors"). Both Netcare and the other investors will increase their
respective interest in the Ampath Trust from 37% to 50% by each acquiring an
effective 13% interest in the Ampath Trust from Fedsure Health. The purchase
price for the full 26% of the Ampath Trust ("the Ampath sale units") is
R98,5 million, payable to Fedsure Health on 30 June 2001. Netcare has agreed
to facilitate the acquisition of all the Ampath sale units pending
finalisation of certain matters between Netcare and the other investors.
Upon such finalisation, Netcare and the other investors will each achieve
the desired 50% interest in the Ampath Trust, with the net acquisition cost
to Netcare amounting to R49,25 million.
4. General
4.1 The conditions precedent
The acquisitions are subject to the fulfilment of a number of normal
conditions precedent for transactions of this nature including, inter alia,
the approval of the Competition Tribunal by 30 October 2001.
4.2 Warranties
The acquisitions include limited warranties.
4.3 Effective date
The effective date of the acquisitions is 1 April 2001.
4.4 Financing the acquisitions
Netcare intends to finance the acquisitions from its internal resources and
loan funds.
5. Financial effects
The financial effects of the acquisitions to Netcare are set out in the
following table:
Pro forma after Percentage
Audited the change
acquisition
Headline earnings per Netcare
share (cents) 20,2 20,2 0,0
Attributable earnings per
Netcare share (cents) 19,4 20,0 3,1
Net asset value per Netcare
share (cents) 102,8 113,9 10,8
The assumptions underlying the financial effects are as follows:
the effect on earnings is based on the results of Medicross for the year to
31 December 2000 and the results of Netcare and the Ampath Trust for the
year to 30 September 2000;
the calculation includes the impact of interest paid as if the acquisitions
had been paid for at the beginning of the period; and
- the amortisation of a net negative goodwill of R147 million (effectively a
non-distributable reserve on acquisition) has been taken into account in the
calculation of attributable earnings per share.
Johannesburg
5 June 2001
Attorneys
H R Levin
Sponsor
Smith Borkum Hare Merrill Lynch South Africa (Pty) Ltd
Member of the JSE Securities Exchange South Africa
Registration Number 1995/01805/07
