Phoenix Healthcare Group Co., Ltd. (HKEx: 1515), China's largest private hospital group, announced on 8 April 2016 that it has signed the term sheet (the "Term Sheet") with China Resources Healthcare Group Ltd. on the acquisition of the assets and equity interests of and/or the management and operation rights held by a subsidiary of CR Healthcare (the "Subsidiary"). Established in 2011, the Subsidiary is wholly-owned by CR Healthcare's and specializes in hospital investment and development, operation management and related extended services. It currently owns or manages 47 medical institutions and 3 elderly care institutions, including 4 Grade III hospitals, 6 Grade II hospitals, 25 Grade I hospitals and 12 community healthcare centres. All hospitals and clinics are covered by social medical insurance. There are a total of 4,954 registered beds and 6,000 beds in operation for the medical institutions and 300 registered beds, which was also the actual number of beds in operation, for the elderly care institutions. The scale of annual income from medical and healthcare services provided by the abovementioned institutions reached approximately RMB2.41 billion in 2015.
Phoenix Healthcare plans to satisfy the consideration of the acquisition of approximately HK$3.72bn by issuing 463 million new shares of the Company at an issue price of HK$8.04 per share to an offshore subsidiary of CR Healthcare. After completion of the acquisition, CR Healthcare will become the single largest shareholder of Phoenix Healthcare, accounting for at least 35.7% of the total issued share capital as enlarged by issue of the consideration shares, and Phoenix Healthcare will be renamed as China Resources Phoenix Healthcare Group Co., Ltd. ("China Resources Phoenix Healthcare"). The total number of directors of China Resources Phoenix Healthcare will remain to be 11 whilst the number of its independent non-executive directors will remain to be 4. CR Healthcare shall have the right to nominate 4 directors. Meanwhile, CR Healthcare has authorized the exclusivity to Phoenix Healthcare for the earlier of 180 days after signing the Term Sheet and other specific date the two parties may agree on later, to meet all the premises of the transaction and sign a finalized conditional Sales and Purchase Agreement with further clarified terms and conditions
Based on the current number of hospitals and beds, China Resources Phoenix Healthcare will operate 107 medical institutions and 3 elderly care institutions, including 7 Grade III hospitals, 12 Grade II hospitals, 34 Grade I hospitals and 54 community healthcare centres, with around 11,780 beds in operation. It will become one of the largest medical service groups in Asia in terms of the number of beds in operation. China Resources Phoenix Healthcare will make the best of both parties' experiences and resources in hospital operation and industry investment and establish the most influential healthcare enterprise group in China and a healthcare group with global influence by proactively participating in the reform of public hospitals and continuously expanding China's medical institutional network against the backdrop of healthcare reform in China. In the meantime, through establishing a group-level, standardized and resource-sharing operation management system, China Resources Phoenix Healthcare will form a strong relationship between the corporate development and the health of the Chinese resident and lay down the most solid foundation for the future corporate development by continuously improving healthcare services quality, clinical technology and service capability, effectively controlling healthcare cost and providing high quality basic healthcare services to residents in China. For the industrial layout, China Resources Phoenix Healthcare will focus on the development of Regional Integrated Delivery System (RIDS), to realize the medical reform goal of a hierarchical medical system and to explore the industrial model that optimizes the allocation of the healthcare resources through developing the service network of general healthcare, intensive care and rehabilitation. Based on the above, China Resources Phoenix Healthcare will further expand along the industry value chain fields to get into the industries such as insurance and pension and explore the industrial development model of healthcare and insurance collaboration and healthcare and pension integration so as to become an important part of China's healthcare supply and practice the development philosophy of fulfilling the corporate social responsibility through industrial development.
CR Healthcare believes that this is the collaboration between two strong and complementary companies. Phoenix Healthcare has its main healthcare resources in Beijing, Tianjin and Hebei. After years of development, it has accumulated extensive experience in public hospital reform and hospital group management. By the signing of the Term Sheet, Phoenix Healthcare will combine with CR Healthcare. CR Healthcare will make up of its presence absence in Beijing, Tianjin and Hebei and further improve its management and service quality by leveraging Phoenix's rich experience in hospital management and operation to further to provide even better healthcare services to the mass public. Big healthcare is one of the most important sectors for the development of Chinese Resources Group. With healthcare services being the core of the entire big health industry, we will gradually build up China Resources Phoenix Healthcare into an important platform of big healthcare segment of China Resources Group.
Phoenix Healthcare states that the restructuring arrangement with CR Healthcare will not only increase the asset scale and improves the profitability of the listed company, but also, more importantly, provide Phoenix Healthcare Group with the most valuable strategic resources and the significant development opportunity that enable the Phoenix Health to expand its presence from Beijing, Tianjin and Hebei to the entire country. In the future, China Resources Phoenix Healthcare will leverage CR's strong capital strength and diversified structure in the healthcare industry and utilize its strong resource integration capability and efficient market mechanism to seize the development opportunity of the healthcare reform and become a renowned healthcare service company with global influence.
End of Press Release