The likely sharing ratio in the new merged entity is expected to be 55% for Aster DM and 45% for Quality CARE.
The merger will be carried out through an exchange of shares through a stock plan. amalgamation approved by the National Company Law Tribunal (NCLT) but without triggering an open offer, bankers said.
Following the completion of the merger, the merged entity, which will continue to be listed on the stock exchange, will be renamed Aster DM Quality CARE. It will continue to be supported by the promoters of Aster, together with two private companies. equity funds-Blackstone and TPG.
Black stone Aster DM is likely to hold around 34% and TPG 11%, while the Moopen family, which has a 42% stake in Aster DM, will hold around 23% in the combined entity.
Even though the two PE firms – Blackstone and TPG – hold a majority stake in the merged hospital chain, they will have no additional control or veto rights, preserving parity with promoter group Aster DM, the sources said.
The merged entity will become India’s second-largest publicly listed hospital chain with a projected capacity of around 10,000 beds across 38 hospitals by the end of fiscal 2025. Quality CARE currently owns Care Hospitals and KIMS Kerala Hospitals.
Aster DM actions have gained 17.55% in the last three months compared to the Nifty’s gain of 8.15%, and currently have a market capitalisation of ₹21,030 crore.
Bankers estimate the combined market capitalisation of both hospital chains at around Rs 40,000 crore.
The combined market value will be allocated such that Aster DM comprises approximately 55% and Quality CARE the remaining 45%. Aster DM is currently valued at 32 times its operating value/FY24 EBITDA. Care Hospitals’ FY24 EBITDA margin of 20% exceeds Aster DM’s 16%.
Under the negotiated terms, both entities will have equal representation on the board of directors and Aster DM promoter Azad Moopen will continue as the executive chairman of the merged entity.
Last year, Blackstone acquired a majority stake in Care Hospitals from Evercare, a TPG RISE fund platform. It subsequently also signed an agreement to acquire a majority stake in KIMS Health. Blackstone paid around $1 billion for the two transactions, with TPG retaining a significant minority stake in the combined platform.
Care Hospitals operates primarily in tier 2 cities and has expanded through organic growth and acquisitions. It acquired Aurangabad-based United CIIGMA Hospital in 2022 through its subsidiary Quality CARE India.
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