Is German hospital giant Asklepios set to buy Mediclin?
Late last year, big German private hospital operator Asklepios caused a stir with the acquisition of a 10.6% share in Mediclin, the publicly quoted German hospital and rehabilitation unit operator.
That led to speculation that Asklepios might be about to counterbid for Mediclin, which is the subject of a €2.85 a share bid from Ergo, the healthcare insurance arm of Munichre.
But analysts think that the move is unlikely. Volker Braun, at Commerzbank, reckons there isn’t a good fit between the two. He thinks that Asklepios simply took a stake at around €2.5 in the hope of a higher bid from Ergo.
Buying Mediclin could lead to a referral to the cartel authorities. Both groups have Reha units, which are generally perceived to be much less attractive than acute hospitals.
The really interesting question, say other analysts, is what will happen to Asklepios, whose owner Bernhard gr. Broermann is rapidly approaching retirement. One said: “When Asklepios took over the Hamburg hospitals a few years ago, there was speculation that it would either float the Hamburg hospitals or float the rest of Asklepios, without the Hamburg hospitals, or float the entire group. Every so often the company indicates an IPO is likely in the next three years.”
By all accounts, Mediclin is not particularly exciting. Earnings before interest and tax fell over €1m to €12.3m in the nine months to September 2008. Profits could be all but wiped out this year, after a landlord who has not charged rent for three years demanded €8m.
Braun says that the fact that Mediclin gets 40% of its sales from rehabilitation, that peculiarly German invention, in which those under the weather get six weeks rest, does not help: “It is harder to forecast Reha earnings, and they are likely to be affected by the recession. There is a pattern that employees who take Reha then get sacked. This is well known, and affects people’s willingness to go into Reha, particularly those with psychosomatic illnesses! The stockmarket does not like hybrid acute/Reha operators.”
On the other hand, Mediclin’s Reha units could be useful for Ergo.
Braun says: “Insurance companies can specify which Reha units patients go to, but they cannot do that with acute, where patients have a choice.”
