SINGAPORE (Dec 18): Rowsley today signed a binding agreement to acquire a 100% of Sasteria from controlling shareholder Lim Eng Hock, better known as Peter Lim, for $1.6 billion.

Sasteria is the owner of Thomson Medical and the controlling shareholder of Malaysia-based TMC Life Sciences (TMCLS) with a 70.36% stake.

Following the acquisition, Rowsley will be changing its name to Thomson Medical Group, pending approval from shareholders.

“Post-acquisition, Rowsley will be one of the largest SGX-listed healthcare players,” says Rowsley chairman Ng Ser Miang. “Both Thomson Medical and TMCLS are well-positioned in their respective markets and the purchase of Sasteria gives us an opportunity to participate in a fast-growing sector.”

The acquisition will see Thomson Medical Group leapfrog over Raffles Medical Group and Indonesia’s largest private healthcare group, Siloam Hospitals, in terms of market capitalisation.

According to Ng, healthcare will be the group’s main business following the acquisition. He adds that the group will be taking a strategic look at Rowsley’s existing real estate and hospitality businesses.

The proposed acquisition will be funded through the issuance of 21.3 billion new shares of Rowsley to Lim at 7.5 cents each, some 32% lower than Rowsley’s closing price of 11.1 cents on Friday.

Rowsley previously announced on July 18 that it would issue 25.3 billion new Rowsley shares at the same issue price for a total of $1.9 billion. The issue price of 7.5 cents was then 0.2 cent higher than its last traded price of 7.3 cents before the trading halt for the announcement.

See: Rowsley to acquire $1.9 bil in healthcare assets from controlling shareholder Peter Lim

Shares of Rowsley had surged 57.5% to 11.5 cents following the July 18 announcement.

See: Rowsley shares up some 58% on deal to buy healthcare assets for $1.9 bil

Rowsley CEO Tan Wee Tuck says the consideration has dropped from $1.9 billion to $1.6 billion because some additional acquisitions “did not take place in time for us to close it this time around.”

“It’s not appropriate for us to share what targets we are going after, simply because they are commercially sensitive and those deals are being kept alive,” says Tan.

“We are certainly focused on growing the group through acquisitions in the future,” he adds.

Rowsley will also acquire about 597.3 million TMCLS warrants in cash. This will be at a price equal to the volume-weighted average price of TMCLS Warrants traded on Bursa Malaysia, for the one-month period immediately preceding the date falling four market days prior to the date of an Extraordinary General Meeting to be convened.

Following the deal, existing Rowsley shareholders will be offered two bonus warrants for each existing share.

Each bonus warrant has an exercise price of 9 cents, with an additional piggyback warrant of 12 cents on the basis of one piggyback warrant for every one bonus warrant that is exercised.

If all the bonus and piggyback warrants are exercised, the group will receive about $850 million and $1.13 billion of proceeds respectively, which will be used to fund its future growth and working capital.

“The changing demographics in Southeast Asia suggest that private healthcare is poised for a sharp acceleration in growth,” says Ng.

Thomson Medical is looking to go beyond its current core obstetrics and gynaecology services to expand into “multidisciplinary” healthcare services, which will include areas such as cardiology.

Shares in Rowsley closed at 11.1 cents on Friday. It called for a trading halt before market opened today.

See: Rowsley shares jump 23% on announcement of healthcare assets acquisition