Egypt’s Cleopatra Said Near Deal to Merge With Alameda Health

(Bloomberg) -- Cleopatra Hospital Group, Egypt’s biggest private hospital operator by number of beds, is nearing a deal to combine with rival Alameda Healthcare Group in one of Africa’s largest health-care transactions this year, people familiar with the matter said.

Cleopatra plans to partially fund the purchase by issuing convertible loan notes to Alameda controlling shareholder Fahad Khater, according to the people. The transaction could value Alameda at about $450 million to $500 million including debt, one of the people said, asking not to be identified because the information is private.

Khater, Alameda’s founder, will become the second-largest shareholder in the combined group with an expected stake of about 25% after the transaction, the person said. Discussions are at an advanced stage, and the companies are likely to reach an agreement as early as the next few days, the people said.

An official at Cleopatra Hospital declined to comment. A representative for Alameda couldn’t immediately be reached for comment outside regular business hours.

The deal would combine two of Egypt’s biggest private medical providers at a time when the coronavirus pandemic has raised the importance of specialized care. Investor appetite for health-care assets in the Middle East and Africa has grown in recent years due to the region’s increasing population and a shortage of public services.

Saudi pediatrician Sulaiman Abdulaziz Al-Habib raised 2.63 billion riyals ($700 million) through an initial public offering of his eponymous company earlier this year. Meanwhile, two of the Middle East’s largest sovereign wealth funds are weighing a joint purchase of Bausch Health Cos.’s Cairo-based drug unit, Bloomberg News reported in November.

Cleopatra, which has a market value of about $458 million, has grown through acquisitions since it was set up in 2014. The company operates six hospitals with nearly 800 beds in total, according to its website.

Alameda’s network includes tertiary care hospitals in Cairo, as well as diagnostic centers, outpatient clinics and specialist care facilities.

©2020 Bloomberg L.P.