| Fri 10 Sep 2004, 10:53 | | Bidco buys time on Alhealth bid |
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Bidco buys time on Alhealth bid
September 10, 2004
By Ann Crotty
Johannesburg - Bidco, the black empowerment company involved in the controversial R3.1 billion acquisition of Afrox Healthcare (Ahealth), has told the competition tribunal it is making changes to the proposed transaction in a bid to address the tribunal`s competition concerns.
However, lawyers opposing the transaction indicated they would continue to oppose any Ahealth deal that involved Medi-Clinic, a major competitor to Ahealth, and would not be satisfied with a rewording of the agreements between the parties.
`We will be reviewing very closely whatever changes are made to the documents,` said one of the lawyers.
He added that as long as Medi-Clinic was involved, any changes would be regarded as `purely cosmetic`.
The lawyers were responding to the latest development in the acquisition of Ahealth by Bidco and Medi-Clinic. The members of Bidco are Mvelaphanda and Brimstone.
Yesterday, the tribunal announced that hearings scheduled for next week had been postponed to January, prompted by Bidco`s statement that it had taken `positive measures to address concerns raised about the transaction`.
No details were provided but it is now likely the measures will result in changes to the transaction.
Competition commissioner Menzi Simelane said the commission would also look closely at the changes to determine whether they represented a new agreement that would have to be filed anew with the commission.
The disposal of Ahealth by its controlling shareholder, Afrox, was first suggested in July last year. But given the postponement and contested nature of the deal, it is likely to be several more months before there is any finality in the matter.
Ahead of any changes, the proposed transaction would result in Bidco holding 75 percent of Ahealth and Medi-Clinic holding 25 percent.
Ahealth has 26 percent of the private hospital market, Netcare has 30 percent and Medi-Clinic 22 percent.
The transaction received the conditional approval of the commission and was referred to the tribunal.
At the initial tribunal hearings into the transaction in July, Medi-Clinic`s largest competitor, Netcare, gave evidence that Ahealth would not survive if the acquisition was implemented.
Lawyers acting on behalf of Netcare told the tribunal the agreement between Medi-Clinic and Bidco would see Medi-Clinic acquiring over 2 500 hospital beds from Ahealth.
They argued that, without these beds, Ahealth would be unable to compete.
Yesterday Jack Mphafudi, the chairman of strategic investments at Mvelaphanda, said the delay in the tribunal`s proceedings would give Bidco time to finalise funding for the deal.
He said that previously `there had been no appetite at institutions to fund Bidco`.
It appears to have been this lack of appetite that resulted in the link-up between Medi-Clinic and Bidco.
Medic-Clinic, which is part of the powerful Rembrandt group, has undertaken to guarantee Bidco`s share of the funding requirements.
Medi-Clinic had previously expressed an interest in acquiring Ahealth on its own.
The proposed transaction involves two legs. The first would see Bidco and Medi-Clinic buying 100 percent of Ahealth and the second would see Medi-Clinic acquiring 2 500 beds from Ahealth.
Netcare`s lawyers have raised competition-related concerns not only about the acquisition of the beds but also about Medi-Clinic having control over the management of one of its major competitors.
