Shares in Aster DM Healthcare rose by over 12% and reached a 52-week high of Rs 449.70 on the NSE this Tuesday, in response to the company’s declaration of plans to consider distributing dividends to shareholders. This decision follows the sale of a majority stake in its GCC (Gulf Cooperation Council) business.
The healthcare company, operating a chain of hospitals, had previously announced a $1 billion deal to separate its India and Gulf businesses. The sale is anticipated to conclude by the March quarter.
On Monday, the board of directors convened to discuss the progress of the transaction between Affinity Holdings and Alpha GCC Holdings for the segregation of the company’s GCC business.
In a filing, the company stated, “The Board was briefed that there has been satisfactory progress on conditions precedent for the transaction, and Affinity and the Buyer are aiming to complete the transaction soon.”
The proposed sale is expected to yield $1.001B, with $903M paid at closing and an additional $98.8M subject to contingent events, including an earnout of up to $70M based on EBITDA achieved by the GCC business for FY24.
Considering future expansion plans, capex requirements, and cash reserves, the Board expressed its intention to distribute 70%-80% of the upfront consideration of $903M as a dividend to shareholders, translating to Rs 110-120 per share.
However, the proposed dividend declaration is contingent upon the completion of the transaction, including approval from shareholders and Affinity for the distribution of transaction proceeds.
By segregating the India and Gulf businesses, the company aims for shareholders to realize the true value of its shares, expecting the transaction to be value accretive. The positive market response to the announcement supports this assessment, as reflected in the company’s stock price after the transaction was made public.
