Struggling hospital group NMC Health confirms interest for possible takeover

10 February 2020, 11:04

An NMC hospital
An NMC hospital. Picture: PA

But the discussions were overshadowed by founder Dr B R Shetty admitting a legal review into his actual interest in the business is under way.

The founder of FTSE 100-listed hospital group NMC Health has been forced to stand down from the board and launch a legal review into exactly how much of the company he owns.

Dr Bavaguthu Raghuram Shetty announced via the business that his holdings, along with two Emirati partners, “have been incorrectly reported historically to the company and the market”.

He will step back from the board whilst “the process of carrying out a legal review in order to verify the total interests” of the businessman and his family is carried out.

Saeed Mohamed Butti Mohamed Khalfan Al Qebaisi and Khaleefa Butti Omair Yousif Ahmed Al Muhairi – Dr Shetty’s Emirati partners – will also have their stake verified.

The embarrassing revelation comes on the same day that NMC Health confirmed it is holding discussions with one of the world’s most powerful private equity firms about a possible takeover.

KKR held talks with bosses at NMC Health, which operates 19 private hospitals from its Abu Dhabi base, about a potential £2 billion takeover.

Swiss-based GK Investment is also in discussions about a possible bid.

The confirmation comes following reports in the Mail On Sunday that a sticking point remains over the asking price, with shares becoming extremely volatile in recent months.

Shares fell 36% in the past week alone, following a sustained attack by short-sellers, who accused the business of potential fraudulent activity.

In a report published in December, short-seller Muddy Waters published a report that accused NMC of misusing funds.

It said: “At the worst of times, the company has invested in large assets at costs that we find too high to be plausible – including from parties we believe are de facto under common control. This behaviour gives rise to concerns about fraudulent asset values and theft of company assets.”

KKR has already invested heavily into healthcare in the US – having previously owned Boots in the UK – and paid 2.8 billion dollars (£2.2 billion) in 2017 for WebMD – a health information business.

It also paid a further 10 billion dollars (£7.8 billion) for US hospital group Envision Healthcare in 2018.

But NMC has been struggling recently and was hit when two UAE-based billionaires, Saeed and Khalifa Bin Butti, were forced to sell some of their investment in the business by their lenders, Deutsche Bank and Credit Suisse.

In a short statement, NMC said it “has received highly preliminary approaches from Kohlberg Kravis Roberts & Co LP (KKR) and GK Investment Holding Group SA (GKI) regarding possible offers for the company”.

It added: “No proposal has been made by either potential offeror and there have been no discussions as to the terms of any possible offer.

“There can be no certainty that any offer will be made for the company, nor as to the terms on which any offer might be made.”

By Press Association

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