Wesfarmers makes Healthscope inquiries

Wesfarmers doing ground work on merits of a $5bn bid for Healthscope.

Wesfarmers has attended presentations and embarked on site visits as part of its efforts to weigh up whether to bid for the $3 billion Healthscope operating business.

But sources signalled yesterday that Wesfarmers’ interest in the private hospital operator so far had been limited to early inquiries, suggesting market speculation it was a potential bidder was overblown.

Wesfarmers is looking at a potential foray into the healthcare sector because it is struggling to find a suitable acquisition in the retail space, sources say.

But the cashed-up conglomerate is making early attempts to sound out a variety of acquisition possibilities, including Healthscope. It is also believed to be looking at JB Hi-Fi and Orica, with some suggesting there was “a new rumour a day” as to what Wesfarmers was looking at.

“Wesfarmers does this sort of stuff all the time,” a source said.

The company is cashed up after selling its insurance underwriting arm in December to Insurance Australia Group for $1.85bn before offloading the insurance broking business this month for $1.16bn to US-based Arthur J. Gallagher and Co.

At that time, managing director Richard Goyder warned that Wesfarmers would be highly selective when it came to acquisitions, making sure it does not overpay for any asset.

But market sources say Wesfarmers had a disciplined approach to acquisitions and typically did not overpay.

It is understood Wesfarmers is interested in growth opportunities and has been looking in the domestic and international economies. Healthcare is one local prospect.

Healthscope’s exposure to the ageing population would be attractive to Wesfarmers. The company has been earmarked for a potential trade sale or a float by private equity owners TPG Capital and Carlyle Group.

A third option is spinning out the company’s properties, which have a suggested market price of $1.25bn, while selling down the operating business via an IPO or to a trade buyer.

Among potential buyers of all of Healthscope, which has a $5bn enterprise value, are Malaysian healthcare giant IHH, US-based HCA and Chinese conglomerate Fosun.

Wesfarmers shares were up 3c to $44.02 in late afternoon trade.

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