Q&M Dental Group's shares shot up 9.8% to 33.5 cents yesterday after it announced an aggressive foray into medical services by offering 13.23 cents per share to take over Catalist-listed Singapore Medical Group.
This is a hefty 41% premium over Singapore Medical Group's (SMG) last traded price of 9.4 cents on 21 December.
“SMG is a very good platform for Q & M to start offering medical services because it has a group of medical specialists who are well-regarded in their respective fields,” said Dr Ng Chin Siau, the CEO of Q & M, at a media conference yesterday.
SMG currently operates 15 medical clinics in Singapore, and these are categorized into Eye Cluster, the Aesthetics Cluster, the Orthopaedics & Sports Cluster, and the Critical Illness Cluster.
There is much opportunity for SMG to cross-sell its medical services to Q & M’s database of over 450,000 patients. Likewise, Q & M can sell its dental services to SMG’s database of over 80,000 patients.
The No. 1 player in its field in Singapore, Q & M currently offers dental services at 55 locations in Singapore and Dr Ng is eager to add medical services at the same facilities.
”The acquisition increases our number of specialists and medical outlets. We also intend to expand SMG’s general medical practice,” said Dr Ng.
Q & M is buying 72.57% in SMG for S$13.99 million from its two substantial shareholders, Mr Felix Huang and Dr Cheryl Baumann.
This triggers a mandatory general offer for the remaining SMG shares at 13.23 cents per share.
The deal is expected to complete in the second quarter of 2013.
Factoring in the conversion and purchase of another 25.5 million Redeemable Convertible Preference Shares that SMG has outstanding, Q & M expects to fork out up to S$22.65 million to acquire 100% in SMG.
To finance the deal, Q & M will raise S$16.77 million by placing out 55 million Q & M shares at 30.5 cents apiece to Dr Kelvin Koh and Dr Felicia Koh, both of whom are under moratorium not to sell the placement shares until 31 December 2017.
The placement shares represent 9.08% in the enlarged issued share capital of Q & M and have been priced at the weighted average price of 30.5 cents on 21 December before its trading halt.
For the press release, click here.
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