Metropolis Healthcare has announced that the company's board of directors have approved the acquisition of Dr Ganesan’s Hitech Diagnostic Centre Pvt. Ltd. (Hitech).
Ameera Shah, Managing Director, Metropolis Healthcare Ltd said, “In line with the strategy to grow, gain market share and increase B2C revenues in focus cities, we are acquiring Hitech Diagnostic Centre which will strengthen our leadership position in the South India market. Our objective with the acquisition is to increase our market share in focus cities of Chennai and Bengaluru and become leaders in some tier 2 towns in South India. We will capture the mid-segment of the market, increase our B2C revenue contribution and leverage scale benefits through cost synergies. Metropolis enjoys a good track record of turning its acquisitions to strong and sustainable business and we aim to replicate the same. Hitech is built by Dr Ganesan on the ethos of good quality and service levels, similar to Metropolis, and enjoys strong brand equity of over 3 decades. I warmly welcome Dr Ganesan as an Executive Shareholder and part of the leadership team of Metropolis enhancing value for shareholders and bettering service for customers.”
Key highlights of the acquisition as per the regulatory filing are:
Metropolis will acquire 100% equity of Dr Ganesan’s Hitech Diagnostic Centre Pvt. Ltd. is a combination of cash and stock deal. The entity is a debt-free company.
The cash consideration will be Rs511cr and Metropolis will issue up to 4,95,000 equity shares of Face Value Rs.2/- each on preferential basis, subject to Shareholders approval, to the Promoter Group of Hitech.
The Cash consideration will be funded through internal accruals and Debt of up to Rs300cr.
Dr Ganesan, Promoter and Founder, will be part of the Leadership Team for the next few years to enable a smooth transition and integration with Metropolis.
The acquisition will allow Metropolis to increase its B2C business in focus cities of Chennai and Bengaluru and benefit through optimization of operational costs in the areas of procurement, supply chain, administration and support resource, laboratory network and back-office infrastructure. It will further allow the Metropolis brand to make deeper inroads in different customer segments across key markets in South India.
Metropolis will get access to 31 laboratories including 3 NABL and ICMR accredited laboratories and 68 collection centres of Hitech.
This acquisition is expected to be completed within 3 months.
L&L Partners represented as Legal advisors and PWC carried out due diligence for the buyer. Vipin Palrecha represented as Financial advisor and VB Legal as Legal advisor to the sellers.
At around 2.54 pm, Metropolis Healthcare was trading at Rs2186.80 per piece up Rs22.80 or 1.05% on Sensex.