SOUTHERN Cross Healthcare’s new owner yesterday declared its intention to bid for Westminster Health Care, the nursing home operator with an estimated price tag of £450 million, from an “unlimited chequebook” for acquisitions.
Southern Cross, which was bought for £162 million yesterday by Blackstone Group, the US buyout firm, became the first party publicly to declare interest in Westminster, as the company aims to become its sector’s biggest operator.
Philip Scott, Southern Cross chief executive, said: “We are preparing an expression of interest for Westminster and will look at anything that comes to the market, if it is high quality and sensibly priced. We have a genuinely unlimited chequebook available for the right deals.”
A merger of Southern Cross and Westminister would give the company about 14,000 beds, making it the third biggest healthcare operator behind BUPA and Four Seasons.
3i Group, the venture capital owner of Westminster, put the company on the market this month and first-round offers are expected before October. BUPA and Barchester — the UK nursing home group controlled by Dermot Desmond and J. P. McManus, the financiers, and John Magnier, the Irish stud-farm boss — are also expected to bid.
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Blackstone, which has a $6.5 billion (£3.6 billion) investment fund, has identified the UK homecare sector as a key opportunity. The buyout firm, which is the biggest shareholder in Spirit Group, the pub operator, and controlled The Savoy Group until April, narrowly missed out on buying Four Seasons in July.
Mr Scott, a former nurse at Belfast City Hospital, yesterday made about £2 million in cash and shares through the sale to Blackstone. He will cash in about half of his stake and reinvest the remainder in Southern Cross. Mr Scott led the management buyout of the company in August 2002, in a deal backed by West Private Equity.
Yesterday’s sale gave West a profit of about £80 million on its investment.
An additional 24 Southern Cross managers, including Andrew Wilson, the chairman, will see their combined stake valued at about £5 million. They are expected to reinvest about half of their respective stakes.