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Metropolis Healthcare to acquire Hitech Diagnostic Centre to strengthen its leadership position in South India

Posted On: 2021-01-17 06:35:49 (Time Zone: Arizona, USA)

Metropolis Healthcare Ltd (NSE: METROPOLIS | BSE: 542650) - a leading diagnostic service provider today announced that the Board of Directors has approved the acquisition of Dr. Ganesan's Hitech Diagnostic Centre Pvt. Ltd. (Hitech).

Key Highlights of the Acquisition:

- Metropolis will acquire 100% equity of Dr. Ganesan's Hitech Diagnostic Centre Pvt. Ltd. in a combination of cash and stock deal. The entity is a debt free company.

- Cash consideration will be Rs. 511 Crores and Metropolis will issue up to 4,95,000 equity shares of Face Value Rs.2/- each on preferential basis, subject to Shareholders approval, to the Promoter Group of Hitech. The Cash consideration will be funded through internal accruals and Debt of up to Rs. 300 Crores.

- Dr. Ganesan, Promoter and Founder, will be part of the Leadership team for next few years to enable a smooth transition and integration with Metropolis.

- Acquisition will allow Metropolis to increase its B2C business in focus cities of Chennai and Bengaluru and benefit through optimization of operational costs in the areas of procurement, supply chain, administration and support resource, laboratory network and back office infrastructure. It will further allow Metropolis brand to make deeper inroads in different customer segments across key markets in South India.

- Metropolis will get access to 31 laboratories including 3 NABL and ICMR accredited laboratories and 68 collection centres of Hitech.

- This acquisition is expected to be completed within 3 months.

- L&L Partners represented as Legal advisors and PWC carried out due diligence for the buyer. Vipin Palrecha represented as Financial advisor and VB Legal as Legal advisor to the sellers.

"In line with the strategy to grow, gain market share and increase B2C revenues in focus cities, we are acquiring Hitech Diagnostic Centre which will strengthen our leadership position in the South India market. Our objective with the acquisition is to increase our market share in focus cities of Chennai and Bengaluru and become leaders in some tier 2 towns in South India. We will capture the mid-segment of the market, increase our B2C revenue contribution and leverage scale benefits through cost synergies. Metropolis enjoys a good track record of turning its acquisitions to strong and sustainable business and we aim to replicate the same. Hitech is built by Dr. Ganesan on the ethos of good quality and service levels, similar to Metropolis, and enjoys a strong brand equity of over 3 decades. I warmly welcome Dr. Ganesan as an Executive Shareholder and part of leadership team of Metropolis enhancing value for shareholders and bettering service for customers." Ameera Shah, Managing Director, Metropolis Healthcare Ltd.

"We are extremely pleased to be associated with a strong customer focused brand like Metropolis. Hitech Diagnostic Centre is a well-known diagnostics chain built over the last 35 years with widespread presence in South India. We share similar business ethos as Metropolis and focus on quality, accuracy, and highest level of customer service. We believe, Metropolis is the right brand to carry forward the legacy of Hitech. We shall ensure a smooth integration of Hitech's business with Metropolis in our bid to increase the value for the combined entity through cost synergies and create a much stronger consumer brand in South India." Dr. SP. Ganesan, Promoter, Dr. Ganesan's Hitech Diagnostic Centre Pvt. Ltd.

Source: Equity Bulls

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