BGH budgets Bt700m to acquire stake in Krungdhon Hospital

Bangkok Dusit Medical Services (BGH) will invest more than Bt700 million to acquire 24.94-per-cent stake in Krungdhon Hospital for Bt55 per share, which will boost its shareholding in Krungdhon Hospital to total of 44.96 per cent.

According to Bangkok Dusit filing to the SET yesterday, the board of the company’s wholly owned firm Royal Bangkok Healthcare (RBH) yesterday approved the share acquisition of Krungdhon Hospital (KDH) of 24.94 per cent shares from the KDH’s existing shareholders (Sukapunphotaram group) at price Bt55 per share worth around Bt205.795 million. After the acquisition, BGH and RBH will hold 44.96 per cent of shares in KDH. Currently BGH owns 20.01 per cent of KDH.

Wichai Thongtang, vice chairman of the executive committee of BGH, said about Bt205 million would be for a big-lot purchase, while the rest would be through a tender offer. The deal is expected to be complete this quarter.

The share price of BGH increased to a maximum level at Bt130.50 yesterday.

He said BGH would rely on the vision set by its president, Prasert Prasarttong-Osoth. BGH will expand through two major directions, organic growth and mergers and acquisitions. The acquisition of Krungdhon Hospital is in line with the company's investment model to expand its medical services to cover a maximum area of Bangkok.

"Even though the growth performance of Krungdhon Hospital is not particularly high, the hospital is at a small scale. The acquisition by BGH will create value in terms of medical services to its customers," Wichai said. "However, there is not yet any conclusion about the investment budget to renovate Krungdhon Hospital. Any improvement plans will be made clear after the shares have been transferred."

BGH will open three new hospitals in Khon Kaen, Phitsanulok and Phnom Penh, with 100-200 beds each. The expansion will allow BGH to increase its total number of beds by 11 per cent to about 5,900.

"We anticipate that our profit in the fourth quarter of last year will come in at Bt1.3 billion, up 50 per cent from the same quarter the year before, but down 33 per cent compared with the previous quarter. We increased the profit target for BGH by 5 per cent for 2012, and 4 per cent this year," he said.

BGH currently operates 31 hospitals, of which 23 belong directly to the company, while eight belong to Phyathai Hospital and Paolo Memorial. BGH aims to increase the number of hospitals within the group to 50 by 2015, both in Thailand and neighbouring countries such as Myanmar, Laos and Cambodia.

The company also expects revenues to increase significantly from Bt44 billion in 2012 to between Bt70 billion and Bt75 billion in 2015, or possibly as high as Bt90 billion if there are many more acquisitions.