Max to buy 64% stake in Jaypee Healthcare at Rs 1,660 cr valuation

Move to help Max establish foothold in North India region

Delhi-based hospital major Max Healthcare Institute on Friday announced a strategic collaboration agreement with Lakshdeep Group to acquire a 64 per cent stake in Jaypee Healthcare (JHL), which is undergoing the Corporate Insolvency Resolution Process (CIRP). The acquisition is based on an enterprise value of Rs 1,660 crore.

“Under the agreement, Max Healthcare shall organise debt for repayment of admitted claims of financial creditors of Jaypee Healthcare and proposes to simultaneously acquire a 64 per cent stake in the company, with a call and put option for the remaining stake,” the company said in a regulatory filing.

JHL reported revenue of Rs 421 crore and Ebitda of Rs 70 crore for FY24. It is estimated that JHL's total debt (including interest component) is around Rs 1,000 crore or so.

 

Max Healthcare stock was down 0.57 per cent on BSE on Friday at Rs 907.4 apiece.

Max Healthcare will raise short-term loans up to Rs 1,000 crore from banks and financial institutions to refinance the existing debt of JHL as an interim agreement.

The National Company Law Appellate Tribunal (NCLAT) has approved the settlement agreed to between Lakshdeep Group and the Committee of Creditors (CoC) of JHL in its order dated September 12, 2024.

“The transaction, which includes a strategic collaboration agreement and the acquisition of JHL’s stake held by financial creditors, shall be consummated in the next 30 days in line with the revival plan approved by the NCLAT,” the company said in its official statement.

Commenting on the acquisition, Abhay Soi, chairman and managing director, Max Healthcare Institute, said that addition of JHL to the network is an “important milestone in our journey” to build a formidable presence in the National Capital Region (NCR), a region which is not only home to 46 million people but also plays a pivotal role in shaping the Indian economy as an economic hub.

The move comes as Max Healthcare has been on an expansion spree to enable an addition of around 3,500 beds in next four years, according to the company’s latest investor presentation.

The proposed acquisition will give Max an increased foothold in the North India region, as JHL currently owns three hospitals in Uttar Pradesh, including two operational hospitals in Noida and Bulandshahr. While the Noida facility has a 500-bed capacity, of which 376 are currently operational, the Bulandshahr one has 200 operational beds. The third facility located in Anoopshahar is non-operational, with a capacity of 100 beds. Max Healthcare currently has more than 4,300 operational beds across the country. “The immediate impact of the acquisition will add around 576 beds to Max’s network, with plans for further expansion,” a person in the know said.

Commenting on the expansion plans, Soi said the company remains focused on formulating a comprehensive strategy that addresses the demands of all stakeholders involved while prioritising the delivery of quality healthcare services in a sustainable manner. Max Healthcare aims at expanding the flagship Noida facility to 1,200 beds over next few years, Soi added.

Max Healthcare along with Apollo Hospitals, Fortis Healthcare and Medanta were among at least half a dozen companies that showed interest in acquiring JHL, according to industry insiders.

Max gains 
 

> Acquisition based on enterprise value of Rs 1,660 cr

> Jaypee is undergoing insolvency process 

> Deal to add about 576 operational beds to Max’s 4,300+ bed network currently operational across India