IHH Healthcare Berhad (IHH) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Island Hospital strengthens the northern cluster in Penang, enhancing leadership in medical tourism and supporting Malaysia's aspirations as a healthcare destination.

• Island Hospital is a high-quality, ACHS-accredited facility with strong clinical capabilities and centers of excellence in oncology and cardiology.

• The deal is seen as transformative, leveraging Island's established network and expertise in attracting Indonesian medical tourists.

• The acquisition complements existing hospitals, enabling cross-referrals and optimizing patient flow, especially as other facilities reach full capacity.

• Penang's strategic location and large catchment area, especially for Indonesian patients, support growth plans.

Financial terms and conditions

• 100% equity stake acquired for MYR 3.9 billion (RM 3.9bn), including a land bank valued at MYR 220 million (RM 223mm).

• The deal values Island at approximately 19x EV/EBITDA (2024 forecast), with 2024E EBITDA at c.RM 207mm.

• Funding will be a mix of internal cash flows and debt, with leverage expected at 60-70%.

• Island Hospital's net debt is about MYR 270 million.

• Deal expected to be EPS and ROE accretive from year two (2026).

Synergies and expected cost savings

• Over MYR 200 million in synergies expected over five years, with MYR 25 million in the first year.

• Synergies include revenue growth (medical tourism, cross-referrals) and cost savings (group procurement, process optimization, marketing best practices).

• Synergy plan is based on detailed, bottom-up analysis.