Ambea to become biggest Nordic care provider with $335 mln Aleris deal (updated)

Ambea publ AB

16/10/2018 11:49

* Buying care operations in Sweden, Denmark and Norway
    * Expects direct cost savings of 90 mln crowns a year
    * Ambea shares up 9 pct

 (Adds detail, shares, analyst comment)
    STOCKHOLM, Oct 16 (Reuters) - Sweden's Ambea  AMBEA.ST  has
agreed to buy nursing homes and assisted living operations of
rival Aleris for an estimated 3 billion Swedish crowns ($335
million) to become the Nordic region's largest care provider, it
said on Tuesday.
    The deal for operations in Sweden, Denmark and Norway will
lift Ambea's full-time workforce to 13,100, looking after 7,690
beds, while Aleris, owned by Investor AB  INVEb.ST , will become
focused purely on its healthcare business.
    Ambea will benefit from significant cost-saving
opportunities, purchasing coordination and experience in
operational and quality development, said CEO Fredrik Gren.
    Shares in the company rose sharply on news of the deal,
climbing 9.4 percent by 1037 GMT.
    Carnegie analyst Kristofer Liljeberg said a sale of the
Aleris care business had been expected. 
    "I would be surprised if the other big players in this
sector hadn't looked at this business as well, so if anything I
would have expected a higher price tag," he said.  
    Ambea said it expects direct annual cost savings of 90
million crowns, half of which will take effect in 2019 before
the full benefits are realised in 2020. It also expects
operational improvements to bring a further 30 million crowns of
annual savings, starting in 2020.
    "Ambea believes that further efficiency enhancements can be
realised over the next two to three years," the company added.
    Carnegie's Liljeberg said there is additional value
potential if the company can lift Aleris Care margins up to
Ambea's level.
    "Then you have a considerable upside, but that's not
something that happens immediately," Liljeberg said.
    Ambea posted an adjusted EBITA margin of 8.4 percent in the
12 months to June 30 compared with Aleris Care's 3.1 percent.   
  
    The company aims to finance the deal through existing credit
facilities plus secured bank financing, but still plans a 1.2
billion crown preferential share issue in the first half of 2019
to repay part of the financing and lower its debt.
    Two of its largest shareholders, private equity firms KKR
and Triton with a combined 50.1 percent stake, intend to vote in
favour of the share issue, Ambea said. 
    The Aleris deal is subject to regulatory approval, with
Ambea expecting it to close during the first quarter of 2019.
($1 = 8.9582 Swedish crowns)

 (Reporting by Johannes Hellstrom
Editing by Niklas Pollard and David Goodman)
 ((johannes.hellstrom@thomsonreuters.com; +4687001008; Reuters
Messaging: johannes.hellstrom.reuters.com@reuters.net))