DomusVi is in exclusive talks to acquire a top ten French player in a bid to keep pace with rivals Orpea and Korian. We speak to a market expert about the deal and give a likely price multiple.
DomusVi, France’s largest nursing home operator by revenue, is in talks to acquire French group HPA, which owns nursing home operator Residalya and property company Patrimoine et Santé. The group had revenue of €120m in 2018 and EBITDA of €21.5m in 2017. We believe HPA is likely to go for a low double-digit multiple.
The deal will see Domus Vi buy the entirety of HPA’s share capital, taking over the operation of 35 nursing homes and residential facilities around France, with more than 2,500 beds. Residalya has 1,700 employees. The group owns the real estate of 12 of the facilities it operates and is developing three new facilities to be opened in the next two years.
“It’s quite expensive to buy in France due to the licence system, so you’re essentially buying market share,” says Stéphane Pichon of Your Care Consult. “Clearly then HPA will go for a double-digit multiple, perhaps 12-13x EBITDA. DomusVi is in a race with Korian and Orpea to maintain its position on the market, where the smaller companies are being acquired by the top players.” A price of around €280m seems likely.
Armonea was acquired by Colisee last month for 12x EBITDA, and acquisitions are the main tool used by French groups to grow in nursing homes. Though operators have also been diversifying their activities by providing domiciliary or medicalised homecare – Korian bought provider Petit Fils last November, and Orpea is acquiring assisted living facilities across Europe.
“Residalya used to be a subsidiary of Groupe Duval, a large real estate operator in France,” says Pichon. “They were partners at the group level with Dutch shareholder Ackermans & van Haaren.” Groupe Duval sold 70% its stake to Ackermans & van Haaren in 2015, and in 2018 Residalya became French real-estate investor Icade Santé’s first acquisition in the nursing home sector, when it bought 14 facilities for €189m. “This latest deal could be used by founder Hervé Hardy to either retire or buy new assets,” speculates Pichon.
DomusVi has been actively buying in Spain, Portugal and France and is also present in Chile where it bought nursing home group Acalis last November. The group had sales of €1,300m in 2017, with a total of 333 facilities across all locations.
Any deal will be subject to the approval of the French Competition Authority. It is expected to complete in Q2 2019.
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