AsterDM, CARE may merge to form India’s third largest hospital chain

Bengaluru-headquartered Aster DM Healthcare Ltd and Hyderabad-based healthcare network CARE Hospitals may join hands to create what could be India’s third largest hospital chain, Mint reported, citing people aware of the developments.

The new entity, which may take shape as early as next month, may be called AsterDM Quality Care Pvt. Ltd, with AsterDM promoter Azad Moopen as chairman, the report said.

CARE Hospitals is run by Quality Care Pvt. Ltd, which also owns KIMS Hospitals, besides related assets in India and Bangladesh. Aster DM Healthcare is a publicly listed company with a market value of about $2.13 billion.

Shares of Aster DM Healthcare were down 1.75% to ₹365.40 at 2.30pm in intraday trading on BSE on Monday, a day the broader Sensex index declined 2.75% to 78,755.44 as global stocks plunged amid weak US jobs data and growing signs of an Iran-Israel war.

Private equity (PE) giant Blackstone, which holds stakes in both hospital chains, is reportedly driving the deal. The PE firm holds a 74% stake in Quality Care.

Once the deal closes, the new entity may have close to 10,000 beds, behind Apollo Hospitals Enterprises and Manipal Health Enterprises.

The Moopen family owns about 42% in AsterDM, and may hold a lower stake in the new entity, along with TPG, Blackstone and other investors, the report said, adding that an open offer may be launched after the announcement of the merger.

A potential deal could see AsterDM Healthcare and Quality Care buying a 5% stake in each other’s entities, the report said, adding that, eventually, it would be a stock swap that will be filed with the National Company Law Tribunal.

Aster DM and Quality Care have signed a term sheet for the merger, and due diligence is underway.

VCCircle first reported on 22 July that Quality Care and Aster DM Healthcare were in talks to merge.