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AMENDED: Wakefield Health seeks control of fourth hospital with $22.6 million offer

Thursday 11th March 2010

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Wakefield Health, which operates two private hospitals in Wellington and one in Hastings, plans to acquire a controlling interest in the fourth facility, Tauranga’s Grace Hospital.

Wakefield plans to acquire a 60% stake in Grace Hospital with a takeover of the current holder of the shares, Norfolk Investments, for $22.6 million cash. Southern Cross Hospitals Ltd. owns the remaining 40%.

Norfolk is 7.5% owned by interests associated with Wakefield chairman John Calder, which stand to net $1.7 million from the transaction, based on the proposed offer. Wakefield said it already has acceptances from holders of more than 51% of Norfolk.

“Wakefield looks forward to the continuation of what has been a successful partnership between Norfolk and Southern Cross,” Wakefield chief executive Andrew Blair said in a statement. “Norfolk will provide Wakefield with an expanded geographical footprint with coverage of the Bay of Plenty region.”

Shares of Wakefield were halted for the announcement today and hadn’t traded when the halt was lifted. They were last at $7.04, valuing the company at $99.7 million. The shares have declined 12% in the past three months.

The company has a robust balance sheet, according to its interim report, with gearing of 8.8%, allowing it to fund an acquisition while financing the expansion of its Bowen Hospital in Wellington, with the first stage slated for completion by December.

First-half earnings tumbled 41% to $3.6 million as revenue declined more than costs.

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