Sime Darby confirms sale of healthcare business to Columbia Asia Healthcare for RM5.7 bil cash

Monday 25 Nov 2024

KUALA LUMPUR (Nov 10): Sime Darby Bhd on Friday confirmed that the group and its Australian partner are selling Ramsay Sime Darby Health Care Sdn Bhd (RSDH) to Columbia Asia Healthcare Sdn Bhd for RM5.7 billion cash. This marks Sime Darby's exit from the healthcare business.

Sime Darby group chief executive officer Datuk Jeffri Salim Davidson said Columbia Asia's offer was one that the group "could not refuse".

RSDH — a 50:50 joint venture between Sime Darby and Australia's biggest private hospital operator Ramsay Health Care Ltd — operates four hospitals in Malaysia and three in Indonesia.

Sime Darby's wholly owned unit Sime Darby Holdings Bhd and Ramsay’s subsidiary AH Holdings Health Care Pty Ltd have entered into an agreement with Columbia Asia for the disposal of their 100% equity interest in RSDH, said Sime Darby in a statement to Bursa Malaysia.

Columbia Asia is a wholly owned subsidiary of Columbia Asia Healthcare Pte Ltd, which is 99.9% owned by HLT Healthcare Holdings Ltd. HLT Healthcare is jointly owned by the Hong Leong Group and One Health Holdings (OHH), which is controlled by TPG-managed funds.

Sime Darby said TPG-managed funds will invest in this transaction together with several co-investors via OHH.

Aside from TPG and the Hong Leong Group, the Employees Provident Fund (EPF) and a wholly owned subsidiary of the Abu Dhabi Investment Authority will be the two major providers of new capital to fund the acquisition. Post acquisition, both these OHH co-investors will own combined shareholdings of approximately 25% in OHH.

Columbia Asia and its subsidiaries operate 22 medical facilities throughout Asia, 14 of which are in Malaysia.

“The deal will enable Sime Darby to unlock the value of its healthcare assets, which have previously been deemed non-core, with a RM2 billion gain on disposal. The deal will allow Sime Darby to streamline its portfolio and provide capital for it to continue further to strengthen its core businesses of industrial and motors,” the group said.

Jeffri said the disposal of RSDH was part of the group's strategic commitment to focus on its core trading business.

“While the hospital business is a great asset, we have always maintained our focus on our core trading businesses of motors and industrial. The offer from Columbia Asia was one we could not refuse,” Jeffri said.

Sime Darby had received offers from several parties for RSDH since it announced it plans to exit the hospital business in June this year. Besides Columbia Asia, the others who had expressed interest included Sunway Healthcare Holdings Sdn Bhd, Bangkok Dusit Medical Services PCL, Bumrungrad Hospital PCL, and possibly even Apollo Global Management Inc and an Indonesian player, according to sources in September.

In March, IHH Healthcare Bhd submitted a confidential, conditional, non-binding and indicative proposal to Sime Darby to acquire RSDH for RM5.67 billion. However, the preliminary discussions had not resulted in a binding agreement.

In a separate development, Sime Darby is in the process of taking over UMW Holdings Bhd in a RM5.84 billion deal, which will make it one of the largest automotive players in the region. Other than a large auto arm, Sime Darby also has a heavy machinery business under the Caterpillar brand.

Meanwhile, Columbia Asia director and TPG senior adviser Tunku Ali Redhauddin Tuanku Muhriz said RSDH has a unique platform of hospitals with a long history of excellent patient care for the communities that it serves in Malaysia and Indonesia.

“This will greatly complement Columbia Asia, and we look forward to working with the doctors, nurses and other colleagues from both RSDH and Columbia Asia to continue contributing to healthcare ecosystems in Malaysia, Indonesia and Vietnam," said Ali Redhauddin, who also is the independent non-executive chairman of pay-TV provider Astro Malaysia Holdings Bhd.

EPF CEO Datuk Seri Amir Hamzah Azizan said its investment in the deal "is in line with our belief in the supportive long-term tailwinds for the healthcare sector in Malaysia, driven by growing disposable incomes and significant under-penetration of health services".

Sime Darby expects the sale and purchase agreement to be completed in the third quarter of 2024, subject to approvals from the relevant regulatory authority.

The group entered the healthcare business with the acquisition of Subang Jaya Medical Centre, then known as Penawar, from United Estates Projects Bhd in 1985.

In 2013, Sime Darby and Australia-based Ramsay set up a joint venture to create RSDH.

Shares in Sime Darby closed down four sen or 1.68% at RM2.34 on Friday, giving the group a market capitalisation of RM15.95 billion.

Edited ByS Kanagaraju

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