- IHH Healthcare Bhd’s bid to acquire Radlink-Asia Ptd Ltd has been called off as it was blocked by the Competition Commission of Singapore (CCS).

- According to reports, the acquisition was blocked as it would have resulted in “a substantial lessening of competition”.

- Recall that last Sept, IHH’s indirect subsidiary Medi-Rad Associates Ltd had proposed to acquire a 100% stake in Radlink-Asia from Fortis Healthcare Singapore Ptd Ltd for SGD137mil (RM347mil).

- Radlink is involved in the provision of outpatient diagnostic and molecular imaging services in Singapore. It has four diagnostic imaging centres, a PET/CT scan centre and a Cyclotron facility.

- Medi-Rad is owned by Parkway, the Singapore unit for IHH.

- CCS said that if the acquisitions had followed through, Parkway would become the only commercial supplier of radiopharmaceuticals in Singapore. Besides gaining a substantial market share, CCS said the merged entity would enjoy moderate to high entry barrier and weak bargaining power for customers.

- Nevertheless, a spokesperson told StarBiz that the company acknowledges CCS’ decision and remain on the lookout for value-accretive opportunities.

- We are neutral on the development. While the acquisition would have fortified IHH’s position in the radiopharmaceuticals market in Singapore, we think that any financial contributions would have been minimal. Note that no financial details were disclosed when the proposed acquisition was announced last Sept.

- Separately, IHH announced yesterday that its indirect subsidiary, Parkway Life REIT had entered into a silent partnership agreement to acquire five nursing homes in Japan for JPY5.9bil (RM182mil). The acquisition is expected to be completed in 1QFY15.

- We maintain our numbers as robust healthcare demand will continue to drive IHH’s growth. Nevertheless, we maintain HOLD for now as we deem IHH to be fairly valued at this juncture at 48x FY15F PE.

Source: AmeSecurities