By Shaimaa Hefzy

The expansion plans were a key driver for the acquisition by Dr. Sulaiman Abdulqader Faqih Hospital Company, listed on the Saudi Stock Exchange, of the local company Dr. Mohammed bin Rashid Al-Faqih & Partners, in a deal worth 1.6 billion riyals, which included a stake owned by Dallah Healthcare Company, also listed on the Saudi Stock Exchange.

According to the companies’ disclosures to the stock exchange, the acquisition came with Sulaiman Al-Faqih’s desire to expand in the city of Riyadh in particular, while Dallah Healthcare divested its stake to support its financial position and cash liquidity to finance its growth and expansion plans, which focus on establishing new hospitals or acquiring existing hospitals, with a focus on assets that it directly operates and fully owns as much as possible.

A very quick background on the companies and the deal

(According to disclosures to the stock exchange from Sulaiman Faqih + Dallah)

Dallah owned 31.21% of the capital of Dr. Mohammed Bin Rashid Al-Faqih & Partners Company, and received a non-binding offer from Dr. Sulaiman Abdul Qader Al-Faqih Hospital Company to purchase this stake. The two parties signed a binding share purchase agreement regarding the transaction last May.

The offer submitted by Sulaiman Faqih Company aimed to acquire all shares of Mohammed Faqih Company from all shareholders, including Dallah Healthcare Company, for a total of up to 1.6 billion riyals, which also announced the completion of the acquisition.

Dr. Mohammed Bin Rashid Al-Faqih & Partners Company was established in 2013 and operates in the ownership and operation of multi-specialty hospitals within Saudi Arabia. It currently owns and operates one hospital, which is Dr. Mohammed Al-Faqih Hospital in Riyadh, a multi-specialty hospital with a maximum capacity of approximately 350 beds and 192 outpatient clinics.

As for Dallah, it has been providing healthcare services for more than 30 years, through 13 medical facilities ranging from fully owned and operated hospitals, affiliated hospitals, and a group of clinics, and has been listed on the Saudi Stock Exchange’s main market since 2012.

Sulaiman Faqih Medical Company, which has been active for more than 45 years in owning, operating and managing hospitals, clinics, health facilities and medical education and training centers, operates Dr. Sulaiman Faqih Hospital with a capacity of 475 beds, 120 clinics and 15 operating rooms with the possibility of expansion.

The impact of the deal on Dallah

(According to company data)

Dallah Healthcare intends to use the proceeds from the sale primarily to pay off part of its existing Murabaha facilities.

Dallah does not expect any material negative impact on its profits from the sale of the stake, as Dr. Mohammed Faqih’s company is in the expansion phase and currently contributes only slightly to Dallah Healthcare’s profits. However, this sale will have a positive financial impact through the capital gain of the deal and the expected savings in future financing costs.

The impact of the deal on Suleiman Faqih

(According to company disclosures)

Following the acquisition, Dr. Mohammed Bin Rashid Al-Faqih & Partners Company, wholly owned by Dr. Sulaiman Abdul Qader Al-Faqih Hospital Company, will be integrated into the group as a wholly owned subsidiary.

The deal supports Sulaiman Al-Faqih’s expansion in Saudi Arabia, particularly in Riyadh, where it will have two hospitals, thereby supporting operational efficiencies, cost savings, and enhanced opportunities for revenue growth.

The acquisition was financed through a combination of internal resources and bank financing facilities, which will result in an expected increase in the Group’s consolidated debt levels, as a result of financing the acquisition and assuming the net outstanding debt of the acquired company.

(Prepared by: Shaimaa Hefzy, Edited by: Omnia Assem, Contact: zawya.arabic@lseg.com )

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