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Healthscope bid: Brookfield intends to seal the deal

The Healthscope Ltd (ASX: HSO) share price is trading marginally lower at the time of writing, down 0.2% to $2.38.

After a lengthy wait, the private hospital operator has this morning updated investors on the progress of the $4.5b acquisition proposal from Brookfield Capital Partners Ltd.

The exclusivity period expired last Friday and the engagement between Healthscope and Brookfield is now non-exclusive. However, as per today’s announcement, Brookfield is in the final stages of its due diligence and intends to submit a binding offer by 31 January, the end of the diligence period.

Brookfield was granted exclusive due diligence over two months ago after its non-binding offer was deemed sufficiently appealing, beating out a rival consortium bid from BGH Capital and Australian Super.

The Brookfield proposal is a $2.585 per share offer via scheme of arrangement and, if that fails, a $2.455 per share off-market takeover offer.

It appears that Brookfield has not been spooked by any skeletons in Healthscope’s closet. Negotiations about the implementation of the deal are said to be ‘well advanced’.

It’s worth keeping in mind, however, that the deal still faces some hurdles.

Aside from due diligence, the proposal is subject to various conditions such as the arrangement of debt financing and regulatory approval.

Also, there’s the 19.13% blocking stake held by the BHG-AustralianSuper consortium. The Brookfield offer has been structured in a way to get around this, but there are no certainties.

Healthscope’s share price has gained 7.2% so far in 2019.

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Motley Fool contributor Cale Kalinowski has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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