Diagnostic chain Metropolis Healthcare on Sunday said it will acquire Dr Ganesan's Hitech Diagnostic Centre Pvt Ltd in a cash and stock combination deal, to strengthen its leadership position in southern India.
The company's board has approved the acquisition partly by way of cash consideration of Rs 511 crore and partly by issuance of up to 4,95,000 equity shares of a face value of Rs 2 each on a preferential basis, to the promoter group of Hitech, Metropolis Healthcare said in a regulatory filing.
"The cash consideration will be funded through internal accruals and debt of up to Rs 300 crore," it added.
S P Ganesan, its promoter and founder, will be part of the leadership team for the next few years to enable a smooth transition and integration with Metropolis, the filing said.
By the acquisition, Metropolis will get an access to 31 laboratories, including three NABL- and ICMR-accredited laboratories and 68 collection centres of Hitech. The acquisition is expected to be completed within three months, it added.
Metropolis Healthcare Managing Director Ameera Shah said, "In line with the strategy to grow, gain market share and increase B2C (business-to-consumer) revenues in focus cities, we are acquiring Hitech Diagnostic Centre which will strengthen our leadership position in the South India market." Objective of Metropolis with the acquisition is to increase its market share in focus cities of Chennai and Bengaluru and become leaders in some tier-2 towns in southern India, she added.
"We will capture the mid-segment of the market, increase our B2C revenue contribution and leverage scale benefits through cost synergies," Shah said.
Dr Ganesan's Hitech Diagnostic Centre Pvt Ltd Promoter S P Ganesan said Metropolis is the right brand to carry forward the legacy of Hitech. "We shall ensure a smooth integration of Hitech's business with Metropolis to increase the value for the combined entity through cost synergies and create a much stronger consumer brand in South India." The acquisition will allow Metropolis to increase its B2C business in focus cities of Chennai and Bengaluru. It will benefit through optimisation of operational costs in the areas of procurement, supply chain, administration and support resource, laboratory network and back office infrastructure, Metropolis Healthcare said.
It will further allow Metropolis brand to make deeper inroads in different customer segments across key markets in South India, it added.