Belgian nursing home group Armonea has merged with French rival Colisee after months of preparing for a sale, creating Europe’s fourth largest nursing home group. We hear from a reliable source that this is effectively a takeover by the French player.
“Armonea CEO Chris Cools is leaving in June, and Colisee is taking over Armonea to continue the company’s European rollout under IK Partners,” says our source. “It is unclear whether owner Verlinvest will be reinvesting in the group which suggests a takeover from Colisee.”
We hear the group sold for an enterprise value of €540m, which is 12x its 2018 EBITDA of €45m. We first reported Armonea was ready for a sale last November, amid speculation the group could go for around €500m, 12.5x its 2017 EBITDA of €40m and around 1.2x 2017 revenue of €420m.
Market expert Stéphane Pichon from Your Care Consult adds it was a recognisable strategic move from the head of Colisee: “I think the head of Colisee is doing a repeat of what she did a few years back when she was at Medica and the company bought Senior Living Group and started a platform in Belgium, before Medica was bought by Korian in 2014.”
“Now buying one of the top three players in Belgium and getting access through that to Germany and Spain, she’s doubling the size of the company and she is clearly within the top four in France now. She wants to grow internationally so she was probably the most motivated out of the French players to go forward with the deal.”
The merging of Colisee and Armonea has created Europe’s fourth largest nursing home operator (excluding the UK) after Korian, Orpea and DomusVi. The group now has a combined total of 270 facilities housing 26,800 residents across Germany, France, Belgium, Spain and Italy. Alone, Colisee was 8th largest in the region with sales of €390m in 2017 and Armonea was 6th. The two now have combined revenues of €810m.
PJT partners, which has been advising Armonea for around 18 months, was joined by Rothschild to advise on this deal.
Our Analysis: Last year a Belgian-based market expert told us Armonea would go for around 10x EBITDA due to the likely buyer being a smaller player. “The likes of Orpea and Korian are too big to buy it, there would be competition issues, so you have to look outside Belgium for a purchaser.” As it happens, the multiple looks bigger though our source was right to look abroad.
Usually buyers of asset-light companies are infrastructure investment funds or private equity. Orpea for example, which owns half of its real-estate, would trade at a premium to others. We rarely see such big opco deals in Europe – the creation of the continent’s fourth largest operator will consolidate this space even further.