Barchester loses interest in rival

BARCHESTER, the nursing home group owned by JP McManus and John Magnier, has abandoned a takeover bid for its smaller rival BetterCare.

Barchester had been expected to lodge a final bid for BetterCare ahead of the deadline for expression of interests at the end of the month. However, Barchester informed the current owners of BetterCare (venture capital giant 3i) last Wednesday it was no longer interested.

If it had been successful, Barchester would have had to fork out close to €130 million. It is believed that Barchester pulled out after a detailed study of the BetterCare business. It found that many of the nursing homes required extensive refurbishment and many of the properties were on very expenses long leases.

The withdrawal of Barchester will leave a three-way fight between Four Seasons, BUPA and Southern Cross for the company.

Barchester has expanded rapidly in recent years and last November it doubled in size after gobbling up Westminster Healthcare for close to €750 million.

The pullout from the BetterCare race is unlikely to dampen Barchester’s appetite for acquisitions. It recently raised €250 million from its investors, which also includes Dermot Desmond, for future expansion.

Its most likely target is the Priory Group, the private hospital chain best known for treating celebrities with drink and drug addictions. A takeover of the Priory, whose recent patients have included supermodel Kate Moss and former Libertines frontman Pete Doherty, would cost upwards of €700m.

Doughty Hanson, the investment house, will begin the formal sale process of the Priory Group in the next few weeks. A number of other nursing homes companies are about to come up for sales, including the largest British group, Patnerships in Care, which has a price tag of €1.1 billion.

Barchester may also fancy a tilt at Ridgmont, which has 1,300 beds across 29 nursing homes. However, it was reported at the weekend that Ridgmont has entered into exclusive takeover talks with Ashbourne Healthcare with a price already agreed.

The private nursing home sector in Britain is seen as a lucrative opportunity given ageing population and creaking National Health Service.

Barchester had so far avoided the Irish market, though it was speculated recently to be looking at potential investments here.

Barchester, chaired by the former Kerry Group boss, Denis Brosnan, may have to be cautious about future expansion in Britain.

In recent months the government’s Office of Fair Trading has begun to look at consolidation in the sector and has signalled its willingness to block anti-competitive takeovers.

Barchester is the third-largest owner of nursing homes in Britain.

It has about 100 homes at present and is tipped to list on the London Stock Exchange in the next two years.