Aster DM Healthcare shares jump over 8% on potential ₹120 dividend payout
On November 28, the company had announced that its arm will sell the stake in Aster DM Healthcare FZC's stale to Alpha GCC for an overall consideration of $1.01 billion.
The board of Aster DM Healthcare is considering distribution of 70% to 80% of the upfront consideration it will receive post the stake sale of Aster DM Healthcare FZC stake to Alpha GCC as dividend, it said in an exchange filing.
Based on the latest update shared by the company on Monday, the company said that there has been satisfactory progress on conditions precedent for the transaction to be completed and that both parties are aiming to complete the transaction soon.
On November 28, the company had announced that its arm will sell the stake in Aster DM Healthcare FZC's stale to Alpha GCC for an overall consideration of $1.01 billion. Of this amount, $903 million is payable on closing of the transaction, while the remaining $98.8 million will be received subsequent to certain contingent events. This was also a confirmation of a CNBC-TV18 newsbreak.
70% to 80% of the $903 million upfront payment will translate to a dividend of ₹110 to ₹120 per share, the company said. The declaration of the dividend is subject to completion of the transaction and shareholder approval.
In an interaction with CNBC-TV18 post the deal announcement, Aster DM Chairman Azad Moopen had expressed his desire to distribute a large part of the proceeds as dividend. "People have been waiting patiently for five years for a dividend," he had said back on November 29 last year. In case the dividend does materialise, this will be the company's first ever dividend payout since it went public in 2018.
“The rationale behind this deal is these two geographies, GCC and India, have different market dynamics and there is a need to look at each differently. We thought we must separate these to realise the value of both markets,” Moopen said.
Aster DM highlighted that the valuation for the stake sale was independently determined by EY and PWC. It further said that 33% of the Gulf business comes from pharmacies and the GCC business gets a lower multiple compared to a pure-play hospital business.
The company also clarified that the transaction does not involve the sale of DM Medicity, which is Aster DM's Indian arm. Additionally, the management has no intention to re-enter the GCC market.
Founded in 1987 from a single clinic in Dubai, Aster DM has a strong presence across primary, secondary, tertiary, and quaternary healthcare and runs 33 hospitals, 127 clinics, 527 pharmacies, and 229 labs and patient experience centres in six Gulf countries and India.
Shares of Aster DM Healthcare are off opening highs but are trading 8.6% higher at ₹434.
First Published: Jan 15, 2024 5:06 PM IST
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