July 30, 2018 / 7:06 AM / 4 months ago

UPDATE 2-Australia's Healthscope to sell Asian pathology operations

(Adds analyst comment, shares)

SYDNEY, July 30 (Reuters) - Australian hospital operator Healthscope Ltd said it would sell its Asian pathology business to private equity giant TPG Capital Management LP to cut debt and bankroll growth plans, months after rejecting two buyout approaches.

The A$279 million ($206.5 million) sale includes 39 pathology laboratories in Singapore, Malaysia and Vietnam, the Sydney-listed company said in a statement to the Australian Securities Exchange.

“The decision to divest will allow our management team to focus on our core operations,” Healthscope Managing Director and Chief Executive Officer Gordon Ballantyne said.

Healthscope is a hot takeover target, having rejected two $3 billion-plus offers earlier this year, one from a fund established by former TPG Asia head Ben Gray.

The country’s second-biggest private hospital operator added that it expects to book a one-off profit of about $165 million from the sale. The unit contributes about A$18 million a year in pre-tax profit, or 4 percent of group profit, the company added.

Analysts said the sale curtailed the company’s Asian presence but may still draw takeover offers given its wide geographic footprint in Australia and weak share performance.

“We remain of the view that all interested parties ... see greatest value in HSO’s 29 freehold properties,” said Credit Suisse analyst Gretel Janu wore in a note to clients, referring to the company’s Australian properties.

Morgan Stanley analyst Sean Laaman said the sale would free up cash to pay for the company’s new hospital under construction in Sydney’s north, and result in “balance sheet concerns dissipating”.

However there was still risk to the outlook for the core Australian hospital business, he added.

Healthscope shares fell 1.4 percent by late afternoon, while the broader Australian market was down 0.4 percent.

$1 = 1.3510 Australian dollars Reporting by Paulina Duran and Byron Kaye in SYDNEY; Aditya Soni in BENGALURU; Editing by Stephen Coates

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