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References and extracts
The Smedley years June 2000 to Dec 2001
Ramsay Health Care
Shares Magazine 07/01/2000
Parts of the health care industry in Australia couldn't exactly be described as being in good health themselves, from the Government's involvement through to private enterprise. The industry seems to be burdened by complexities of Government control and powerful vested interests.
Mayne Nickless acquires
corporate health group (update)
AAP News 07/04/2000
Mayne Nickless' diagnostic services arm has acquired corporate health services group, Corporate Wellness Solutions (CWS) as part of the company's strategy to grow the division.
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Mayne said CWS had an extensive list of bluechip corporate clients and recently won major tenders to provide health evaluation services for leading corporate groups.CWS' services include annual medical checks, pre-employment examinations, health advisory services, as well as testing and health support for staff.
It also had strategic relationships with leading international health management groups including the US-based Mayo Clinic Healthquest and Harris Healthtrends, the University of Sydney, Deakin University in Melbourne, and VicHealth.
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MNDS chief executive Shane Tanner said the acquisition of CWS would lead to new for Mayne, as corporate health services and wellness products were a growing area.
Mayne Nickless says acquires
corporate health services group
AAP News 07/04/2000
CWS' services include annual medical checks, pre-employment examinations, health advisory services, as well as testing and health support for staff. It has operated for over 10 years and is considered a leader in the field.
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, of Mayne Nickless Diagnostic Services, said that the acquisition of CWS would open new opportunities to Mayne Nickless Diagnostic Services."Corporate health services and wellness products is a growing area," he (Shane Tanner, Chief Executive Officer) said.
"Significantly for future growth, CWS has a respected and established name and long standing relationships with major corporate clients. It greatly complements a number of pathology and diagnostic imaging wellness initiatives which MNDS is currently involved in."
New Surgeon's Mayne Task
Australian Financial Review 07/08/2000
As good as Smedley, with his crash-through-or-crash management style, is at turning around moribund organisations, delivering Colonial-sized windfalls to Mayne Nickless shareholders will prove harder than most appreciate.The poor odds stem from the fact that the Australian health-care industry, where the majority of Mayne Nickless's assets are concentrated, looks odious when compared with the pot of gold that is the funds management industry.
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Smedley's Colonial strategy was simple: buy at least one competitor every six months and chop the tripes out of the merged company's costs.As a strategy, it was beautiful in its simplicity. But it could not have worked without the fact that the industry money flow was growing at double-digit rates and the people paying for the services - the pensioners of tomorrow -have not yet objected to fund managers earning 50 per cent profit margins.
At Mayne Nickless, the industry landscape could not be more different. Mayne Nickless has nearly $1.1 billion, or 85 per cent of its market capitalisation, tied up in private hospitals, on which it earned a pre-tax return last year of less than 6 per cent.
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But a typical private hospital has just five or six customers that count -State and federal government instrumentalities, and the big five health insurance funds - who are committed to paying less for more.And due to an excess of private hospital beds, those big and powerful customers can switch between suppliers on a whim. Unlike funds management, where a strong brand name and customer loyalty can produce fat margins, private hospitals are a commodity business, with margins to match.
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At any single hospital the top five clients will often account for 70-80 per cent of revenue.Way back in 1992, when Mayne Nickless had just acquired its hospitals businesses, the profit margin on sales was 20 per cent. Last year Mayne Nickless's hospitals business returned a margin on sales of less than 8 per cent.
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Most of the fall in private hospital margins can be blamed on the combination of excessive optimism and bad management. It is in the latter area that a person like Smedley can, and will, make a difference.
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One of the biggest problem areas of the private hospital investment boom is so-called co-located hospitals. A co-located hospital is a private hospital built within the campus of an established public hospital.
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However, in the rush to build co-located hospitals, all the major operators paid insufficient attention to the high capital costs and the difficulty of negotiating contracts with health funds.
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Most private hospital operators underestimated how much they needed to charge to recoup the technology costs. Many have found themselves suffering big losses on co-located hospitals.
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In terms of the private hospital learning curve, Smedley could not have timed his arrival at Mayne Nickless better. The private hospital profit tide, which has been ebbing for two years, is about to flow again.
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- - - - - - for the first time in a decade, Mayne Nickless knows how much it costs to perform a specific procedure, which should lead to fewer loss-making contracts.
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Thanks to those developments, Mayne Nickless's hospital business is on the brink of a two to three-year profit recovery.
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All this should mean that Smedley, without lifting a finger, will preside over a creditable earnings turnaround at Mayne Nickless health care.
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His predecessor, Bob Dalziel, is given little credit by the market. But the favourable results Smedley delivers will owe a good deal to Dalziel's spade work.While squeezing more profit out of private hospitals should be Smedley's top priority at Mayne Nickless, - - - - - -
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With logistics becoming a highly specialised, global industry, with multinational clients demanding all-in-one solutions, Mayne Nickless needs to get dramatically bigger or get out. The latter route looks more likely.With Mayne Nickless's transport and logistics business apparently near the end of the road, the company's future looks decidedly medical.
Mayne's New Man Has Got His
Orders
Business Review Weekly 07/14/2000
- - - - - one thing is certain about Mayne Nickless: the diversified logistics and health-care company will have to be broken up and most of the pieces sold, closed, floated or overhauled.Two months ago, the Mayne Nickless board ratified a plan to break up and redirect the business. The plan includes the sale of its British express courier business, its remaining "time critical" business overseas - Loomis Courier Service in Canada - and its local ports operations; joint-venture deals for its Asian logistics business; and the creation of a new entity that will offer an alternative funding mechanism to the health insurance funds.
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The plan was delivered to the board by managing director Bob Dalziel in May. - - - - This means the group would have to grow through acquisitions. With each division hungry for capital, one of them would have to go.A key part of Dalziel's strategy was to separate the company into two distinctive parts, health and logistics, and create a new division called e-health, to be headed by Peter Hourihan, who was Mayne's chief information officer. The plan called for Mayne Nickless to then sell logistics and use the funds to expand the health business.
However, the board believed that the company's metamorphosis needed to be directed by a new leader. That leader, Peter Smedley, who replaces Dalziel on August 1, is believed to have agreed to the sweeping changes before he took the job.
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He says another problem with Mayne Nickless is low morale: "There have been so many changes and restructurings and sales over the years that nobody feels safe or confident. There are a lot of bully-boy tactics adopted, and in the health division there is a total lack of management depth. Most of the people running health have no experience; they come from logistics, the tobacco sector or anywhere else but health. That is a real problem because the health sector is very complex and complicated, and you need to know all the nuances of it."
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With the benefit of hindsight, Mayne Nickless should have turned itself into a telecommunications company in 1991 when it invested in Australia's second telecommunications carrier licence. Instead, it opted for health and transport, two difficult industries. The health industry is in dire straitsin Australia, with margins falling from 20% in 1992 to less than 8% today. Transport is also a tough sector; the logistics industry's average margin has fallen from 7% in 1992 to 5.2% today.
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The changes Smedley is expected to preside over include the sale, by September, of Parceline and Interlink in Britain for up to $450 million; the sale of the Canadian-based Loomis business for up to $150 million; the divestment of the ports business in Australia for $50 million; and a strategic alliance with a large European logistics business to cover Mayne Nickless logistics in Australia and Asia.
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The next step is the eventual spin-off or sale of the entire logistics business. It is believed that if Dalziel had renewed his contract, he would have sold the logistics business by early next year. Smedley is renowned for doing things quickly, so a sale may happen earlier.
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The notable absence of the group's diagnostics services division in the new health structure suggests that the board is still deciding what to do with it. It is believed that the chief executive of the division, Shane Tanner, has been a strong advocate of floating it as a separately listed business.
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For months, industry observers have speculated that if Mayne Nickless wants to be a vertically integrated health service provider, it should buy a health fund. Bill Kirk, the new managing director of the health division, confirms that the company has looked at buying a health fund or buying a stake in a series of health funds. He also confirms that there is work going on to create a new financial model that could offer an alternative to the health funds. This would be a new company, backed possibly by banks, which would expand their financial services operations into health insurance.
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the market does not view Mayne Nickless as a good bet, given the performance of its share price over the past five years and the more than $550 million in abnormal write-offs it has made in the past seven years. A thousand dollars invested in Mayne Nickless in July 1997 is now worth about $598.
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Smedley and the board have six months in which to fix Mayne Nickless. With the potential sale of assets valued at more than $800 million, a mooted float of the diagnostics business and a push into e-commerce, Smedley might be able to ensure the company's survival. A recent PricewaterhouseCoopers report says that if the hospital industry can be turned into an integrated trading community of suppliers, distributors and hospitals by 2002, it will save $235 million a year. Mayne is leading the push to achieve these changes.
Pacman's Diagnosis Sorely
Needed
Australian Financial Review 07/19/2000
That aside, Hudson argues that many of ``the challenges faced by Mayne's businesses are structural rather than operational and therefore the upside is not as significant as the market is starting to believe''.She's sat down and done the numbers.
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The accompanying graphic details this analysis and it's the hospitals that are the ugliest.
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Hudson says its radiology assets are overpriced by the market, possibly due to the recent float of Medical Imaging Australasia. She didn't say it, but insiders say Mayne Nicklesss has been badly affected by the MRI scandal.
P&O Offer On Ports
Disappoints Mayne
Australian Financial Review 07/25/2000
Mayne Nickless Ltd is reconsidering options for its $50 million-plus Australian ports business after failing to reach agreement on price in negotiations to sell the assets to P&O.
-------------------
However, it is understood negotiations broke down because P&O was prepared to offer only about $30 million for the business, about half the price sought by Mayne Nickless.
Battle For Medi-money Hots
Up
Australian Financial Review 08/08/2000
The battle between cash-rich private health insurers and profit-poor private hospital operators moved into outright war yesterday when Australian Hospital Care threatened to boycott MBF-funded patients at its Gold Coast hospitals.What may appear to be a minor skirmish amid contract negotiations brings into the open the looming battle as the private hospital companies attempt to grab some of the $1 billion in new premium income going to the health funds this year.
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The hospital owners, of course, have themselves to blame for what has been a poorly conceived investment binge in recent years and now they are crying poor.Their problem is that the funds own the customers.
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The reason is its freeze on payments since 1997 and while MBF claims to have offered an increase this year, it was clearly not enough for Dr Stanford who went on to note in his ASX statement that the fund, with an 18 per cent national market share, accounted for 25 per cent of complaints to the Health Insurance Ombudsman.
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Health funds own the customers and the hospital owners are commodity suppliers who are forced to increase spending to keep their doctor base but are reliant on the funds to pay for their services.This structural imbalance explains why many tip Mayne Nickless to buy its favourite health fund, Axa Health, or even Medibank Private to move the rationalisation process forward.
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The fight is an issue for the Government also because, after its policies have poured billions into the funds, the end game should be a better health system, not rich insurance funds.
GPs Inc - Profits Or
Patients
Sydney Morning Herald 08/10/2000
As more and more doctors trade private practice for a company pay cheque, Gerard Ryle looks at just where their loyalties lie.
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Others include the Mayne Nickless corporation which through its subsidiary Health Care of Australia owns four medical centres in Sydney.
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Douglass is referring to what is known as vertical integration, which involves bringing general practice and diagnostic tests under the one roof.He says it is the economies created by this concentration of services under a single banner that have attracted institutional investors, which in turn, has allowed medical centre operators to offer large sums to doctors willing to move their family practices and work in the larger centres.
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``By the time the public wakes up to what has happened, it is going to be all over. There is not going to be a local independent GP.''
MAYNE NICKLESS LIMITED: Director
Appointment/Resignation
Australian Stock Exchange Company Announcements
08/29/2000
Mr Geoff Tomlinson has resigned from the Board of Mayne Nickless effective from 29 August, 2000. - - -results from a growing conflict of interest arising from the activities of Medweb Limited and the health care operations of Mayne Nickless Limited. He has a strong commitment to Medweb through his roles as a founding shareholder and Chairman of that company.
Doctors On Call To Go
Corporate
Australian Financial Review 08/30/2000
Consolidation in the health services industry is frenetic, with listed companies staging a battle royal to attract private practices into their folds as the sector rapidly becomes corporatised.Sonic Healthcare, Mayne Nickless, Primary Healthcare and Medical Imaging Australasia are all in the trenches, using scrip to convince GPs, pathologists and radiologists that a brighter future resides on the sharemarket.
It's an intense process, not to mention one which some see as risking the quality of service provided to patients.
Shake-up For Mayne Nickless
Australian Financial Review 08/30/2000
New Mayne Nickless managing director Mr Peter Smedley is expected to announce asset writedowns and cost-cutting initiatives when he reports the group's results today.Analysts tip writedowns of more than $100 million, particularly in the group's struggling $1 billion hospital portfolio.
---------------------While cost-cutting is expected to be a key priority for Mr Smedley, the market will also look for signals as to his strategy to revive the struggling conglomerate.
MAYNE NICKLESS LIMITED:
Preliminary Final Report
Australian Stock Exchange Company Announcements
08/30/2000
MAYNE NICKLESS PROFIT RESULTMayne Nickless Limited today announced a net profit after tax and before abnormals for the year to 2 July 2000 of $75.4 million, a 31% reduction on the 1999 result of $109.9 million. After abnormal charges of $249.5 million, which were largely due to asset writedowns, the Company reported a net loss of $174.1 million.
-----------------------------
The Managing Director and Chief Executive Officer, Mr Peter Smedley, who joined the group on 19 July 2000, said despite an improvement in the underlying earnings for the group, the overall result was unacceptable. It highlighted the imperative to address the company's cost base and pursue strategic cohesion.
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Mr Smedley said the underlying contribution from the health care assets was pleasing. "The health care result and the fact that the private health care environment is improving in Australia provides a strong basis for future growth."
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The group's hospital division, Health Care of Australia, reported strong revenue growth of 15% to $879.6 million. Reported earnings were $54.2 million, which is 8% below the 1999 result and reflects the impact of the weak first half. Underlying earnings, however, showed improvements and were ahead of the prior year. HCoA also improved its underlying margins.MAYNE NICKLESS DIAGNOSTIC SERVICES
The diagnostic services business achieved 38% revenue growth to $358.4 million as a result of a series of diagnostic acquisitions, as well as organic growth. Diagnostic imaging accounted for 35% of the total revenues, up from 15% last year.
Earnings before interest and tax was up 18% to $33.8 million although returns continued to be impacted by the unsatisfactory performance of its New South Wales pathology business.
The diagnostic business continued to grow during the year with several significant acquisitions:
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The growth in health insurance fund membership to 41.2% of the population will reduce pressure on the private health funds.Mayne Nickless remains the largest and most profitable private hospital group in the country and expects to be better able to leverage its hospital network.
Here's To The Long, Hard
Haul
Australian Financial Review 08/31/2000
Yesterday's earnings crash at Mayne Nickless underscored the extent of the disarray at the healthcare and logistics conglomerate.But the situation won't daunt chief executive Mr Peter Smedley, who has quickly moved to clean the slate and bring on board four former Colonial executives to help him turn the group around.
Taking a massive $249.5 million in abnormal charges in his first few weeks in the job, Mr Smedley has also vowed to sweep a broom through Mayne Nick's cost base.
He promised the ``clearly articulated group strategy'' which the market has long demanded, but investors may have to wait until October when a proposal being worked on by 20 executives is expected to be presented to the board.
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The group was also rumoured to be working on plans to provide an alternative funding mechanism to health insurance funds through a new separate entity, and the creation of a new e-commerce health arm.
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Mayne Nick faces massive structural hurdles to improved performance, but at a minimum Mr Smedley has signalled some sweeping internal changes which should eventually be reflected in the numbers.
Red Ink Flows As Smedley Wields
Knife
Australian Financial Review 08/31/2000
Mr Smedley also foreshadowed a cost-cutting program ahead of unveiling a new strategic direction later this year.``Today's result was clearly unacceptable,'' he said after revealing a $174.07 million loss, a 136 per cent turnaround on last year's profit.
The abnormal losses related mainly to the write down of assets and brand names, with analysts saying more writedowns were prevented by a lack of retained profits.
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Mr Smedley said he hoped to release a detailed strategy for the group ``within a month or so'' and said the review would include a rethink of capital planning and the group's target of a 75 per cent dividend payout ratio.A 20-member team is working on the project, which is expected to determine whether the company has a long-term future in both logistics and health care.
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Mr Smedley said his priority this year would be to cut costs to make the group's solid revenue gains flow to the bottom line, in contrast to last year when a 16 per cent cost increase in its continuing businesses negated double-digit revenue growth.
Smedley Focussed As Mayne
Nickless Sees Red
The Age 08/31/2000
Announcing the results as unacceptable, Mayne's new managing director said the net post-abnormals loss of $174.1 million showed why the company had to address an expanding cost base that had prevented it from translating strong revenues into improved profits.
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Mr Smedley unveiled a shake-up and a strategic review of the conglomerate, which he said would result in cost reductions, business improvements and a more cohesive strategic approach.
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Several cost-saving intiatives will be rolled out in the first half of this financial year, but these will not have any immediate impact because of the timing and will be more significant in the second half of the year.On the question of potential acquisitions or divestments, Mr Smedley said his initial focus was on extracting maximum value out of the existing businesses.
Smedley takes axe to Mayne
pain
The Australian 08/31/2000
Abstract - Australasian Business Intelligence:
Smedley Targets Costs As Mayne Plunges Into Red
The Age 08/31/2000
Mr Smedley unveiled a shake-up and a strategic review of the company, which he said would result in cost reductions, business improvements and a more cohesive strategic approach.``This group has been operating in the past as at least seven separate companies,'' he said. ``The philosophy that is going to underpin the group going forward is it's run as one company.''
Mayne Vows To Cut Costs
Newcastle Herald 08/31/2000
Mayne Nick Execs Quit
Australian Financial Review 09/05/2000
Mayne Nickless chief executive Mr Peter Smedley has continued the shake-up of senior management, with three of the health-care and logistics company's most senior operational heads departing as part of a new divisional structure.
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Mayne Nickless Diagnostics chief executive Mr Shane Tanner, who was the company's former chief financial officer for five years, MPG Logistics chief executive Mr Robert Atkins and Mayne Nickless Express chief executive Mr Jean-Francois Boyer, have all left the company.
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A seven strong executive team now sits above the operational heads four are ex-Colonial staff. Mr James, who came to Mayne Nickless with Mr Smedley from Colonial, is expected to drive the company's restructuring.
Mayne's Bonuses After Loss
Australian Financial Review 09/15/2000
Mayne Nickless's top tier of management received performance bonuses totalling more than $350,000 last financial year despite the company reporting a $174 million net loss and its shares hitting a 13-year low.The extent of the management clean-out at Mayne Nickless became apparent with the release of the group's annual report yesterday, which revealed that all but one of its six highest-paid managers last year have now left.
The only remaining officer, former chief operating officer Mr Bill Kirk is to leave at the year's end.
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The man Mr Smedley replaced, Mr Bob Dalziel received a $125,000 ``performance-based bonus'' despite departing six months ahead of the end of his contract. In addition to his $1.2 million total remuneration last year, Mr Dalziel received termination and accrued leave payments of more than $1.2 million.
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Former head of Mayne's health-care arm Dr Barry Catchlove, who left in March, received a performance bonus of $62,500 as part of total remuneration of more than $1.8 million.
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At the company's November 14 AGM, shareholders will be asked to approve the issue of 2 million shares to Mr Smedley, financed by an interest free loan.
Ailing Mayne pays big bonus
The Australian 09/15/2000
Abstract:- Australasian Business Intelligence:
A company report shows Dalziel was paid $A2.42 million in the 13 months to 31 July 2000, including a $A1.22 million termination package. Dalziel led Mayne for four and a half years, during which time the group's share price slumped from $A6.60 to $A2.90, representing the loss of about $A1.28 billion in market capitalisation.
An ill wind blowing
The Bulletin 09/19/2000
Abstract:-- Australasian Business Intelligence:
Australian hospital companies continue to struggle in the second half of 2000. - - - Mayne Nickless is in the red again and is attempting to cut costs. Ramsay has written off $A2.9m but had a net profit of 11 per cent. Australian Hospital Care is in even worse condition.
Private Health Cover, But No
Beds Certain
Sun Herald 09/24/2000
Despite high occupancy levels and a shortage of private beds in some areas, many private hospitals are struggling to make money.The surge of millions of people into private insurance in the past few months is expected to make the situation worse, not better.
In NSW, at least five private hospitals have recently gone into receivership including NSW Private (formerly the Masonic), Bigge Street Private in Liverpool and Metropolitan Rehabilitation in Petersham.
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The Australian Doctors' Fund yesterday blamed the problems on the Federal Government's policy of managed competition in health care, which was introduced in 1995 by Health Minister Carmen Lawrence.``You have private hospitals at record occupancy levels, but you have record low profitability,'' he said.
Mayne review claims victim
The Australian 09/26/2000
Abstract:-- Australasian Business Intelligence:
Mayne Nickless Limited's management shake-up has resulted in the departure of its chief financial officer, Steve Somogyi. - - - - -Many roles at individual hospitals have been abolished and centralised. Around 40 executives are believed to have been made redundant, - - -
Corporate Medicine
Business Review Weekly 09/29/2000
CONTRACTS THAT BRING GENERAL PRACTITIONERS UNDER A CORPORATE UMBRELLA HAVE POLARISED THE HEALTH SECTOR
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Entrepreneurial doctors, beginning with Geoffrey Edelsten in the early 1980s, have exploited general practice as a lucrative business. More recently, the Health Care of Australia division of Mayne Nickless has provided a corporate link between pathology, radiology and general practice. And whole sections of medicine -such as pathology - are already dominated by publicly listed companies.
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A different view was recently expressed by accounting firm KPMG, in a report called Corporatisation of General Practice, conducted for the Department of Health and Aged Care and presented at an Australian Medical Association conference in June. (The report is interesting because the head of KPMG's health consulting division, and a contributor to the report, Dr Barry Catchlove, was previously head of the HCA division of Mayne Nickless. HCA runs several medical centres, as well as pathology and radiology operations.)
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If a doctor's referrals can be controlled - or directed - a large slice of that specialist market can also be tied in. If a medical centre has, for example, 10 full-time general practitioners, each generating $200,000 of Medicare income a year, they are also generating on average $3.2 million a year in downstream specialist billings. If a substantial part of that is picked up by businesses or specialists who work in the same corporate group, it is a good income stream.
Mayne's Shares Surge To High On
Speculation Over UK Sale
Australian Financial Review 10/04/2000
Analysts speculated yesterday that Mayne's could reap more than $300million from the sale of its time-critical express businesses, Parceline and Interlink Express, in Britain.
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Since taking the helm in July, Mr Smedley has overseen the departure of many of the company's former management team and promised to reduce costs by consolidating the company's six business units.Mr Smedley is expected to continue Mayne's expansion into radiology and pathology.
The company is yet to comment on the future of its small Malaysian, Chinese and Thai logistics operations, which, if the British and Canadian operations are sold, would be Mayne's only remaining offshore businesses.
Macquarie Bank has also raised the possibility that the company will emulate smaller rivals, such as Sonic Healthcare and Revesco Ltd, which have moved closer to GPs and specialists by buying medical clinics.
The corporate owners of such clinics hope GPs and specialists will favour them as provider of high value-added healthcare services.
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A 20-strong team is working on the review under chief financial officer Mr Peter Jenkins and chief operating officer Mr Stuart James
Curing pain in Mayne
The Australian 10/08/2000
Abstract:-- Australasian Business Intelligence
- - - in June 2000, Mayne stock was trading as low as $A2.90. In first week of October 2000, Mayne stock hit a year high of $A4.49, representing a 45 per cent increase in the company's share value since Smedley was appointed. However, analysts now suggest the stock is at the top of its range and is expensive.
Parceline sale talk denied
Lloyd's List Daily Commercial News 10/09/2000
Abstract:-- Australasian Business Intelligence:
- - - A report in the "Australian Financial Review"- - - - has been denied by Mayne Nickless.
Mayne Fights $28m Claim By UK
Trucker
Australian Financial Review 10/23/2000
Mayne Nickless is fighting a $28 million claim by an English trucking company for breach of contract by its Interlink parcel service subsidiary in the United Kingdom.Night Trunkers' managing director, Mr Michael Parker, said that Interlink had illegally ended a long-term services agreement in October last year.
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Mayne Nickless is understood to be selling its UK logistics businesses, Interlink and Parceline, which could raise more than $400 million. The French Post Office, and possibly KPN, are considered to be potential buyers.
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Meanwhile, brokers have been promoting the stock on indications that Mr Smedley has accelerated cost-cutting and job shedding across the group.
Revesco Rules Out Gribble As
Mayne Hovers
The West Australian 10/28/2000
REVESCO has ruled out buying the other half of Gribble Pathology Group in the near future as speculation continues the Perth-based health industry investor will become part of a Mayne Nickless-led corporate play.
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Speculation is focused on either a takeover of Revesco or Mayne Nickless spinning its pathology assets into the Perth company.Revesco executive chairman Ian Trahar told shareholders at the company's annual meeting yesterday that buying the outstanding 50.1 per cent of Gribble, one of Australia's biggest pathology operators, was not on the cards.
Deutsche Upgrades Outlook For
Mayne Shares
Sydney Morning Herald 10/30/2000
Predictions of a significant turnaround in the fortunes of the private health industry, coupled with managing director Mr Peter Smedley's political connections and management skills, were the driving forces behind a dramatic investment upgrade on Mayne Nickless by Deutsche Bank. - - - - - said previous key concerns that private hospitals were suffering from excess capacity were no longer an issue.This followed the latest industry analysis showing a 45 per cent increase in the ownership of private health insurance and 14 per cent increase in admissions per annum.
``Hospital construction has ceased and some private hospitals are in receivership,'' Ms Allen said.
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``Through the acquisitions of Trust Bank in Tasmania and State of NSW while at Colonial, Smedley has developed excellent government relationships at both State and federal level,'' the analyst said.Such political connections, she argued, should not be underestimated in an industry where ``the Government is both competitor and customer''.
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``This means becoming the lowest cost, quality operator and leveraging [or creating] a dominant market position across all its industries.''
Market Punts On Smedley
Magic
Australian Financial Review 10/31/2000
Peter Smedley is still at least three weeks away from laying down his blueprint for Mayne Nickless, yet the 57 per cent increase in the company's stock price since his appointment has already delivered him a $4.4 million paper profit on his 2 million options. - - - - the value of the company has since risen by some $654 million.To put this in context, it represents a massive 63 per cent of the company's entire value when it hit a recent low of $2.92 a share on March 9 when all hope of rumoured takeovers disappeared.
The issue now for a stock that, extraordinarily, is trading at a premium to the market (at 19 times this year's expected profit of 27cents a share) is, of course, whether the faith is justified.
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But the theory says that if Smedley can direct the 2.8 million new fee-paying fund members into his hospitals by attracting better doctors into better hospitals and ramp up margins in his diagnostic and pathology businesses, the faith is justified.
-----------------------
To be fair, Smedley has shown some form by cleaning out a raft of senior managers.
Health Stocks In Fine Fettle
Sydney Morning Herald 10/31/2000
The ascent of Mayne Nickless above $5 has grabbed most attention in the healthcare sector, but others are also on the move.Australian Hospital Care and Healthscope have both bettered the 38 per cent gain in Mayne over the past three months, while Ramsay and Sonic Healthcare haven't done that badly either.
MAYNE NICKLESS LIMITED: Other
(Part A : Section 01 Of 01)
Australian Stock Exchange Company Announcements
11/01/2000
Mayne Nickless Limited today announced that it had sold its time critical express operation in the UK and Ireland, which includes Parceline and Interlink Express, - - - for A$535 million - - .
------------------------
"In this context, our business in the UK and Ireland would have lacked the operational scale and European presence going forward to ensure continued growth opportunities.
Pacman begins Mayne purge.
The Australian 11/01/2000
Abstract:-- Australasian Business Intelligence:
Recently appointed Mayne Nickless chief, Peter Smedley, has sold the company's European express freight business.
Mayne Sells Logistics For A
Sterling Price
Australian Financial Review 11/02/2000
The sale of Parceline and Interlink Express businesses to a La Poste subsidiary ends the company's plan to conquer the European logistics market, conceived in the 1980s by former chief executive Mr Ian Webber.
--------------------------
Macquarie Bank has raised the possibility that the company will emulate smaller rivals, such as Sonic Healthcare and Revesco Ltd, by entering corporate arrangements that encourage GPs and specialists to favour them as a provider of high value-added health-care services.
Dalziel's Team The Prime Movers
In A Valuable Deal
Australian Financial Review 11/02/2000
- - - was largely the work of former managing director Bob Dalziel and his former management team.
-----------------------
Fund managers were broadly supportive of the strategy implied by yesterday's announcement of a renewed focus on extracting higher earnings from the company's health-care operations and taking less from a pool of logistics assets spread across three continents.
Smedley Cashes Up In Europe, Now
For The Mayne Game
The Age 11/02/2000
- the sale will leave Mayne with minimal debt levels. He also must decide what he will do with the remaining, uneasy mix of businesses and what he will do about growth at both the top and bottom-line levels.
------------------
He (Smedley) said yesterday that the exit from Europe would enable Mayne to focus on pursuing growth in its logistics markets in Australia, Asia and Canada. He has said previously that it was imperative for the group to address its cost base and pursue strategic cohesion.Smedley appears to be indicating that he will hang on to the logistics business (although Canada looks the odd element of the portfolio) despite the lack of obvious logic or synergies in healthcare and logistics.
-------------------------
With his former right-hand man at Colonial, Stuart James, over-seeing the slash-and-burn exercise - there has been a wholesale purging of Mayne's senior ranks - and James' record of cost-cutting, Smedley will be able to focus increasingly on strategic issues.The more complicated of those relate to healthcare, - - - . That's partly because of its own failings - too rapid expansion, an unbalanced portfolio of hospitals, lack of focus on costs, poor co-ordination and integration between its hospital and diagnostics divisions - but is also driven by the external settings.
-------------------------
The benefits of that investment, however, haven't filtered through from the funds to the hospitals, who are price-takers under the current industry set-up. Mayne needs to find a way of gaining greater leverage over the funds, with some speculation that it may even buy its own fund.That would be brave - it would be competing with its own customers - - - - .
------------------
Greater efficiency through a more urgent and ruthless approach to managing its healthcare portfolio, of course, would create better earnings and financial flexibility.
Mayne Has Help From Low Dollar
In UK Sale
The Age 11/02/2000
Flying In A Different
Direction
Sydney Morning Herald 11/02/2000
Air New Zealand's hopes have taken a tumble, but Mayne Nickless is doing somersaults of delight.
-----------------------
A year ago it was hard to excite any interest in ailing transport/logistics and health-care group Mayne Nickless. With a new chief executive, some good news coming out of the private hospitals division and only a few weeks away from a major policy statement on the future direction of the group, the investment community is agog.
-------------------------
The new chief executive, Peter Smedley, who is renowned for his voracious appetite for new companies, now has some firepower.
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- - - - the rest of his strategy has been the subject of guessing games among the brokers. - - - - Clearly he has been keeping a fairly low profile.
-----------------------
None of the divisions has been making respectable returns and not even Smedley can do much about it.There is another school of thought and one which has been gaining a lot of currency in recent weeks that the private hospitals business is on the cusp of a major recovery.
-----------------------
The trouble for private hospitals is that their client base is the large medical funds which have controlled pricing and therefore profits for the hospital operators.A highly capital intensive business with no pricing power is just about the worst business cocktail imaginable.
----------------------
And this is why the betting from the analysts' community is on Smedley attempting to build a much larger business in hospitals and wrest pricing control away from the funds and into his hands.
------------------------
He will need to buy up big in order to counter what is likely to be parallel rationalisation in health funds a move which is currently being pushed by the Government.In terms of what this means for the remaining transport and logistics businesses in Mayne Nickless, it is a fair bet that the remaining offshore operations in Asia will be sold.
Smedley Eyes A Mayne
Injection
Australian Financial Review 11/10/2000
New statistics released yesterday reveal private health insurance participation has climbed to 45.8 per cent of the population, so it's not surprising that investors are focused on listed hospital operators.
---------------------------
Smedley is rumoured to be eyeing Healthscope and/or Australian Health Care. But many sector observers reckon those punters have jumped the gun.
Mayne Nickless Keeps Asian Plans
Under Wraps
Australian Financial Review 11/14/2000
Mayne Nickless is expected later this month to commit to building its Asian health-care franchise when new chief executive, Mr Peter Smedley, unveils his blueprint for the group.However, today's annual meeting in Melbourne is expected to offer shareholders only scant insight
------------------------
Publicly Mayne Nickless has continued to commit to the expansion and development of its existing health care and logistic operations, - - -
-------------------------
Mayne Nickless operates three hospitals in Indonesia and has one hospital under construction in Fiji with local joint venture partners. Analysts said the company could examine expansion into jurisdictions such as Hong Kong, Singapore, India and Malaysia.
MAYNE NICKLESS LIMITED:
Chairman's Address To Shareholders
Australian Stock Exchange Company Announcements
11/14/2000
The last financial year can best be summarised as a very difficult one which produced a very poor performance. Along with all your Directors, I share your concern at what was a completely unacceptable outcome.
MAYNE NICKLESS LIMITED:
Chairman's Address To Shareholders
Australian Stock Exchange Company Announcements 11/14/2000
SPEECH BY GROUP MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Quite clearly this growth in costs has prevented Mayne Nickless from converting its revenue gains into higher profits.
------------------------
Despite the increase in underlying earnings, poor cost control resulted in slightly lower underlying margins. That it why we are addressing the group's costs as a matter of the highest priority.
--------------------------
The contribution from the group's health care assets increased by $14.1 million to $91.6 million. We believe this improvement - and the better outlook for private health care generally - provides a strong basis for future growth in this segment of the group's business.
-----------------------
I would now like to take a few minutes to discuss the outlook for the group going forward.
-----------------------
Given those very good positions, it is more than reasonable to ask why the group's financial performance is not stronger.
----------------------
However, we acknowledge that there are also a number of internal factors which we can address to improve performance.Mayne Nickless has had a poor approach to the management of costs. It has replicated its overhead costs through its previous autonomous business unit structure. That, in turn, led to an inability to leverage cross-business or, particularly in the case of our hospital network, the intra-business synergies that could have been harnessed to advantage.
The company operates a multiple brand structure and this presents a confused identity to the marketplace. You could be forgiven for asking, "What is the Mayne Nickless brand?" And, it appears that the optimum levels of synergies to be derived from integrating acquisitions have not been fully realised.
---------------------------
So, let me outline to you how we are addressing this situation.The strategic review is intended to deliver a clearly articulated group strategy, which I will share with you upon its completion and subsequent endorsement by the Board.
------------------
Obviously, costs will be the more immediate outcome, ahead of the improvements we are seeking in revenue growth.
--------------------------
In the interim, I would like to mention some of the work we have underway that will reduce costs and improve our earnings capacity.
--------------------------
The elimination of duplication in the current structure will provide substantial cost benefits and ensure that Mayne Nickless becomes a variable cost business.It will also bring about a stronger group orientation across the businesses.
Within the consolidated organisation, all business lines report to the Chief Operating Officer - - - - . This means our support functions will now serve the entire business.
------------------------
We have created a single group marketing function, and centralised business development and sales functions for each of the health care and logistics divisions.Similarly, all Personnel activities have been taken out of the business units and consolidated into a group function.
-----------------------
The Corporate services function combines all legal, secretarial and corporate administration functions into one department; and Public Affairs has also been consolidated into a Group function.The resulting elimination of duplication in the current structure will provide substantial cost benefits as integration takes place, and create an environment for ongoing productivity improvement.
We have also undertaken a range of operational initiatives and I'd like to comment on some of those now.
The consolidation of group purchasing will allow us to make better use of our technology to lower our costs.
In pathology, we are integrating our previously separately run NSW businesses, which will bring greater synergies and productivity benefits.
The group's hospitals are being re-organised into an integrated network. This approach will assist in achieving a stronger clinical focus in our hospitals, a better product mix, and improved resource management.
----------------------------
We are reviewing the opportunities for growth, both organically and by acquisition.
---------------------
We are seeking to develop a health care model that ensures we can leverage the value of our extensive health care operations.
-----------------------
All business cases for funding must be reviewed by the office of the Chief Financial Officer. Each proposal will be vetted under strict economic evaluation criteria, and the return on each proposal must exceed our weighted average cost of capital, and be subjected to a full post-implementation review.
---------------------
In conclusion, ladies and gentlemen, I look forward to joining you in twelve months time and reporting on a revitalised Mayne Nickless.
Investors Get Negative On Mayne
Chance
Australian Financial Review 11/15/2000
Mayne Nickless suffered its biggest share price fall yesterday since the announcement of its new chief executive, Mr Peter Smedley, after the company ruled out any radical break-up of the group.
-------------------------
Speaking at the annual meeting, Mayne's chairman, Mr Mark Rayner, said the company had taken a ``hard look'' at the divestment of one investment stream and had concluded that any spin-off would erode value.
--------------------------
Mr Smedley played down the prospect of the company buying a health fund, saying an integrated health-care strategy needed a strong relationship with health funds but did not require ownership.
Mayne Warning On Lower
Payout
The Age 11/15/2000
Mayne Nickless has put shareholders on notice not to expect any more high dividend payout ratios, as it trims its sails under new chief executive Peter Smedley in the hope of restoring profitability after the horror run of recent years.
-----------------------
But yesterday the company ruled out any plan to do this by splitting its health-care and logistics businesses or snapping up a health fund.
------------------------
Mr Smedley said measures already taken to improve and streamline the organisation - which included ending the duplication across Mayne's business units in such areas as personnel, information technology, finance activities and support functions - would have a modest impact in the first half.``In the second half, however, we expect to deliver further business improvement which will have a much more obvious impact on the financial outcome, particularly as the full benefit of the first-half savings flow through.''
-----------------------------
``We are now beginning to negotiate with the funds as a network rather than on a hospital-by-hospital basis, which ultimately must be part of our strategy, because we believe we can better manage the network of the hospitals and pathology and integrated radiology as a complete network. We believe that management process will pay off for Mayne Nickless.''
Reduced Dividend Ratio
Likely
The Age 11/15/2000
Pain in Mayne is plain.
The Australian 11/15/2000
Abstract:-- Australasian Business Intelligence:
Investors cut short the Pacman's
honeymoon.
The Courier-mail 11/15/2000
Abstract:-- Australasian Business Intelligence:
- - Much of the decline was attributed to the company's plans to reassess its target dividend payout ratio of 75 per cent in order to support future business expansion. Mayne Nickless chief executive, Peter Smedley, said he saw growth potential in Asia for the company's logistics and healthcare businesses, but refused to give details. - - - - - while the group's hospitals will negotiate as a block to gain more power when agreeing on fee structures with health funds.
Asia key to ailing Mayne.
The Mercury 11/15/2000
Abstract:-- Australasian Business Intelligence:
- - - - Mayne Nickless has indicated that its medium term plans include restructuring and expansion in Asia.- - - - Mayne will aim to expand its Asian operations through an increased number of joint venture projects.
Private Hospitals In Recovery
Ward
Business Review Weekly 11/17/2000
DIVESTMENT OF LOSS-MAKING UNITS AND GOVERNMENT INCENTIVES FOR HEALTH INSURANCE HAVE BRIGHTENED THE OUTLOOK FOR PRIVATE-HOSPITAL OPERATORSAfter a bleak financial year, which ended with the three biggest operators of private hospitals declaring losses and asset write-downs totalling $360 million, listed hospital companies are staging a Lazarus-like recovery.
-------------------
The turnaround in the private health sector is a direct result of $2.3 billion in government incentives this year to encourage private health insurance membership, combined with the introduction of Lifetime Health Cover from July 1. - - - - the potential client base of private hospitals has grown by 2.7 million, to more than eight million. Private hospital occupancy rates are already rising, and should continue to do so.
----------------------
In the case of Mayne Nickless, there is constant speculation about the direction of the company under its new chief executive, Peter Smedley. Since his appointment on June 26, there has been an exodus of senior management from the hospital and logistics divisions. Most of these executives have been replaced with people who worked with Smedley when he was chief executive of the banking and finance group Colonial. The new general manager of the hospitals division, Paul Tissot, is a former Colonial executive.
Healthy rumours.
The Australian Financial Review 11/17/2000
Abstract:--- Australasian Business Intelligence:
On 16 November 2000, speculation is rife that Mayne Nickless is to purchase Australian Hospital Care (AHC).
Leader of the Pac.
The Australian 11/17/2000
Abstract:-- Australasian Business Intelligence:
The new chief executive of Mayne Nickless will unveil his strategic plan for the group on 23 November 2000. - - - He is likely to tackle the issues of branding and moving into more profitable areas of health, such as insurance. It could also signal major staff cuts.
Mayne Nickless may bid for
Australian Hospital Care
AAP News 11/20/2000
Healthcare and transport group Mayne Nickless Ltd was expected to unveil a takeover bid for competitor Australian Hospital Care Ltd (AHC) after trading in the shares of both companies was halted today.
-------------------------
A Sydney analyst said AHC would be a canny purchase for Mayne."There are a number of attractions for Mayne Nickless - it adds to their geographic coverage without a lot of overlap, with AHC being quite strong in Victoria," the analyst said.
Mayne stalks rival - AHC says
initial bid on table.
The Courier-mail 11/20/2000
Abstract:--- Australasian Business Intelligence:
Mayne Nickless is expected to announce a takeover bid for Australian Hospital Care (AHC) on 21 or 22 November 2000.
Warburg Misses The Mayne Gig
Australian Financial Review 11/21/2000
As an addendum to the AHC bid (which we can be gratuitous in saying that we foreshadowed), Smedley still has to sort out his devil of a problem in diagnostics.In the bidding war for private practices he can't compete with the likes of Sonic Healthcare and Medical Imaging Australia which can use far higher-priced scrip as consideration in acquisitions.
Next in Smedley's firing line may be the listed Revesco, which has changed its name to Medical Care Services. The pathology operator 50 per cent owner of Gribbles is looking cheap, according to analysts.
Smedley's Form Makes Mayne Move
A Good Bet
Australian Financial Review 11/21/2000
Just four months to the day since he slipped his feet under the big Mayne desk still warm after Bob Dalziel's swift removal the great consolidator has lobbed a takeover bid worth about $330 million.
--------------------
Smedley's penchant for opportunistic takeover bids is on full display in Mayne's bid for Australian Hospital Care.AHC has just begun the painful recovery from past mistakes when two major shareholders Malaysia's Landmark group and founder Mark Bryce are open to offers.
------------------------
Not all Mayne shareholders will enthusiastic about this deal. - - - the total Mayne bid (including debt) will cost about $330 million.That's about 8.3 times AHC's claimed gross profits (EBITDA) from its core hospitals. Assuming those numbers are about right, this is not a cheap transaction.
Mayne Poised To Boost
Margins
Australian Financial Review 11/21/2000
Peter Smedley has approached his task at Mayne Nickless in textbook style, cleaning out layers of management, stepping up the pace of change and now exercising classic Pacman tactics by increasing its share of the private hospital market.
------------------------
Where once each of the hospitals had its own chief executive, finance chief and other administrative functions, all that is now centralised, with health fund bargaining, links to the doctor networks and purchasing now done on a centralised basis.If just three senior people at each hospital have gone, so have some $20 million in costs through the process.
----------------------------
The ACCC will come into play because as Smedley increases his hospital share from 20 per cent to 27 per cent, he will get a strangle-hold on the Gold Coast and in Melbourne and some divestitures may be necessary.
---------------------------
This remains the key for Smedley, turning his increased market power into winning a better share of the Government-subsidised health-fund loot and no-one has yet found the winning formula.The key is to control patients through their general practitioners.
Mayne Bids To Dominate Private
Health IndustryStewart
Australian Financial Review 11/21/2000
Mayne Nickless is poised to make a $300 million takeover bid for Australian Hospital Care, triggering the first major step in the rationalisation of the private hospital industry.If successful, Mayne Nickless will control about half of the country's private hospital beds, giving it a formidable position when negotiating reimbursement rates with private health funds.
---------------
- - - - marks a significant step towards the company's goal of exploiting the economies of scale that come with being the biggest private hospital operator. - - - - as the private hospital sector exploits the increased uptake of private health insurance that analysts expect will mark a significant turnaround in private hospital profitability.
---------------------
AHC managing director Dr Michael Stanford said last night that rationalisation of the Australian private hospital market was inevitable. ``To improve revenues and improve costs, there has to be a consolidation of the private hospital market,'' he said.
----------------------
John Deakin-Bell, UBS Warburg health-care analyst, said the hospital sector was ready for a period of consolidation, which would occur ``sooner rather than later''. Earlier, AHC had said it had received a proposal on Sunday that ``might lead to a takeover''.
Mayne Gets The Classic Smedley
Care And Attention
The Age 11/21/2000
The ink is barely dry on Smedley's lucrative contract to become CEO of Mayne and already he has signed off on a $535 million asset sale and, it appears, is about to launch a $200million bid.If he does it would be classic Smedley, moving faster than anyone anticipates and grabbing just about every sensible opportunity that presents itself.
Acquiring AHC - - - - would be direction-defining.
--------------------------
AHC hasn't been an indiscriminate developer/acquirer of hospitals - it has built clusters within which its individual hospitals tend to be fairly specialised. Bringing them next to Mayne's should enable Mayne to extract some of the scale benefits that are potentially available from running regional hospital networks.
-------------------------
Smedley is a good acquirer but a better integrator. At Colonial, most of his acquisitions appeared fully priced but the scale of the synergies extracted, and the speed at which they were extracted, justified the prices paid.
----------------------
- - - until recently it (AHC) was haemorrhaging because of losses flowing from the La Trobe Regional Hospital and the Hobart Private Hospital co-location. La Trobe CEO Michael Stanford solved the La Trobe problem last month by handing it, and its $6 million-plus of losses, back to the State Government.
----------------------------
- Mayne - - - shown its hand on one element of its strategy - simple expansion and pursuit of scale. - - - - in a more integrated and coordinated fashion. - - - a redefinition of Mayne's relationship with its immediate customer base, the private health insurers. - - - - Increased scale and concentration of ownership of the hospitals would help rebalance the relationship, as would a significant reduction in health-care costs - - .
Hospital Rivals In Hunt For Deal
Tonic
The Age 11/21/2000
AHC's 26 per cent shareholder, Malaysian company Landmarks Berhad, signalled earlier this year that it was selling assets from its disparate property portfolio, after three years of mounting losses.
Mayne tipped to lift hospital
stake.
Sydney Morning Herald 11/21/2000
Abstract:- Australasian Business Intelligence:
Australia's Mayne Nickless is tipped to acquire fellow hospital owner, Australian Hospital Care (AHC). - - - Mayne is likely to pay $A166 million-plus for AHC, possibly in scrip.
Mayne To Move On AHC In $330m
Deal
Australian Financial Review 11/22/2000
Mayne Nickless is expected to unveil today a cash bid with a scrip alternative for Australia Hospital Care, valuing the target around $330 million.
--------------------------
Analysts were upbeat about the proposed takeover.
--------------------------
A successful takeover would see Mayne Nickless operating about one in two ``non-charity'' private hospital beds in Australia with about 6,200 beds, dwarfing its nearest competitor.
Mayne Nickless launches takeover
bid for Aust Hospital Care
AAP News 11/22/2000
Mayne said it would make an off-market tender for AHC at $1.15 cash per shares.It will also offer AHC a scrip alternative of one Mayne share for every 4.2 AHC shares.
Mayne Nickless shares soar on
news of AHC takeover deal
AAP News 11/22/2000
Shares in Mayne Nickless bounced higher today after the healthcare and transport group unveiled its takeover bid for Australian Hospital Care (AHC). - - - pushed Mayne's shares as high as $5.20 in early trade - - - it had sealed a $395 million takeover deal with AHC, - - .
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- - Peter Smedley said the deal would give Mayne an extra 1,616 private hospital beds in Australia's eastern states, on top of its existing 4,518 private beds.
Mayne Nickless ratings affirmed
by S&P after takeover bid
AAP News 11/22/2000
Standard & Poor's today affirmed its BBB long-term and A2 short-term ratings on Mayne Nickless Ltd (MNL) and its rated debt issues. The rating outlook is stable.
------------------------
"Should the acquisition of AHC proceed, the key challenges for MNL will be to successfully integrate the two businesses and generate significant improvements in operational performance."
--------------------
- - - - - providing significant opportunities for operational synergies by centralising key activities such as procurement, negotiations with private health funds, and information technology.
--------------------------
- - - competitive market conditions and integration risk may constrain its ability to achieve a sgnificant turnaround in the short-term," the rating agency said.
AUSTRALIAN HOSPITAL CARE LIMITED: Intention To Make A Takeover Offer (Part A : Section 01 Of 03)
Mayne Nickless Limited today announced its intention to acquire Australian Hospital Care Limited, a major Australian private hospital operator.
-------------------------
The Australian Hospital Care board has indicated that it intends to recommend the offer to its shareholders, in the absence of a higher offer and subject to there being no material adverse change to the value of the offer to accepting shareholders.
---------------------------
"This move is also in line with Mayne's strategy to consolidate in our core industry sectors of health care and logistics.
----------------------------
"Mayne expects to derive significant maintainable cost and revenue synergies following the integration of Australian Hospital Care. These synergies are expected to be fully realised by the end of the 2002 financial year."
PRESS RELEASE: S&P Affirms
Australia Mayne Nickless Rtgs
Dow Jones Australia and New Zealand Report 11/22/2000
Classic Pacman Attack On AHC
Australian Financial Review 11/23/2000
You have to hand it to Peter Smedley. His quick bid for Australian Hospital Care has the crowds clapping and in classic Pacman style he's keeping his powder dry through an opportunistic capital raising.Back of the envelope figures show that he's sitting on a war chest.
The cost of the AHC equity to Mayne Nickless is up to $203 million, while AHC has $174 million of debt on its books. This adds up to a $370 million-plus price tag.
-------------------
But if the company moves back to its long-term gearing target, the magic number is $500 million. (available for the next takeover)Who's a target? Superficially there are four listed candidates: Medical Care Services (formerly Revesco), Ramsay Healthcare, Primary Healthcare and Medical Imaging Australasia.
------------------------
We can't finish this item without reminding readers that the ever-acquisitive Smedley was issued 2 million shares in Mayne Nickless at an issue price of $2.93 and financed by an interest-free loan to boot.Based on its close of $5.25, the Pacman is sitting on a paper profit in the order of $4.6 million. Nothing to scoff at, given that he's only had the gig as the Mayne CEO for four months or so.
Mayne's Grab For Hospital Lead
Role
The Age 11/23/2000
Analysts said yesterday the deal could start an overdue industry rationalisation in the wake of more Australians taking out private health insurance and the industry starting to pick up momentum.
-------------------------
Mayne yesterday foreshadowed it would cut head office costs, rationalise non-clinical functions with a group structure, reduce medical and surgical supply costs, and deliver labor-mix improvements at the non-psychiatric hospitals.It flagged new revenue streams, with pathology and diagnostic imaging services to be installed at Australian Hospital Care services in Victoria, and pathology operations to be established in the Gold Coast.
*Mayne Nickless to retain both
divisions under strategic plan
AAP News 11/23/2000
Healthcare and logistics group Mayne Nickless would retain both divisions under a strategic development plan announced today.
----------------------------
Chief executive Peter Smedley said the company was establishing a network business model to maximise returns from its business portfolio.
Mayne's $208m Bid For Private
Hospitals
Sydney Morning Herald 11/23/2000
Significantly, and based on a 50 per cent acceptances of the cash offer, Mayne's gearing is expected to be about 19.5 per cent, placing it in a strong position for further acquisitions.
-------------------
Mr Peter Smedley, would first need to display his famous cost-cutting skills to prune back AHC's $300 million-plus cost base and exploit economies of scale.
Hospitals the winners in Mayne
Nickless bid for AHC.
The Australian 11/23/2000
Abstract:-- Australasian Business Intelligence:
In Australia, Mayne Nickless will enjoy more bargaining power with health funds in its Australian Hospital Care (AHC) takeover. The health care operator will own 29 per cent of all Australian private hospital beds. - - - Australia's health insurers are flush with money, thanks to the Australian Government's $A2 billion-plus a year in membership subsidies. - - - Mayne's new strength will give it a lead in driving harder bargains, ensuring the hospitals, not just the insurers, share in the taxpayers' generosity.
Mayne hits high note.
The Advertiser, 11/23/2000
Focus falls on small radiology
practices.
The Australian, 11/23/2000
Reputation is crucial to ...
The Australian Financial, 11/23/2000
Mayne plan wins praise.
The Courier-mail, 11/23/2000
Overhaul plan pays off.
The Daily Telegraph, 11/23/2000
Mayne's lift from new plan.
The Mercury, 11/23/2000
Revitalised Mayne eyes more
growth.
The West Australian, 11/23/2000
Mayne To Cut Costs Then Expand
In Asia
Australian Financial Review 11/24/2000
Mr Peter Smedley has unveiled his strategy - - - - pinning the company's growth on cost-cutting and improved marketing before seeking to expand in Asia. - - - he would look at buying health and transport assets offshore, particularly in Asia, to improve earnings.
-----------------------
While analysts regarded the presentation as light on financial details, investors appeared unperturbed and drove Mayne Nickless shares to a 16-month high of $5.63. Some of that gain is attributable to reaction to the AHC bid.Analysts said the former Colonial chief's much-hyped strategic blueprint was typical of his ambition to ``underpromise and overdeliver''. - - - He outlined a rationalisation of some transport depots, medical centres and technology functions. Mayne Nickless will also outsource some non-medical services, such as maintenance, cleaning and catering.
He said the company had a poor approach to cost management and repeated it would reduce the number of head office and support staff, including administration, technology, sales and marketing functions, across both the logistics and health care divisions. - - - He will also rebadge Mayne Nickless's disparate range of brands under the name ``Mayne'' for marketing purposes.
--------------------------------
``The opportunities in Asia in both sectors are absolutely open to us,'' he said, adding the company would get ``a better bang for your buck by doing something in Asia''.
Expansion, Rebadging Are Mayne
Game Plan
The Age 11/24/2000
Peter Smedley - - - detailed expansion plans for a rebadged and revitalised healthcare and logistics giant.
-------------------
Mr Smedley's strategic plan will see Mayne rebranding itself, cutting costs, producing bigger profits and expanding its operations, particularly into Asia.Since announcing that Mr Smedley was replacing Bob Dalziel - - - - the company's share price soar more than 90 per cent, adding close to $1 billion to its market value and placing it just outside the top 50. - - - - - Mayne Nickless was now armed with a dangerous amount of financial capacity, with plenty of room to grow after deciding to stick to its established model of health care and logistics.
--------------------------
In the coming months, the new brand name ``Mayne'' will be rolled across its entire network as the company cuts costs and builds an efficient model that will ultimately expand offshore through transport and logistics acquisitions, particularly in Asia.
--------------------------
Mr Smedley said the strategic review had found there had been poor cost culture, no leveraging of cross-business and intra-business synergies, multiple brands and confused market identities, and poorly integrated acquisitions.The main game now, he said, was to streamline operations and put in place a network business model.
This model would include group purchasing strategies, elimination of duplication and outsourcing non-medical activities such as maintenance, cleaning and catering. - - - while developing a cost culture that will allow us to translate organic revenue growth on to the bottom line, returning the business to industry benchmarks,'' Mr Smedley said.
Mayne to cut costs then expand
in Asia.
The Australian Financial, 11/24/2000
Mayne soars on Smedley's
vision.
Herald Sun, 11/24/2000
Sonic Rules Out Counter Bid For
AHC
Australian Financial Review 11/25/2000
Sonic Healthcare has ruled out any form of investment in hospitals, including launching a counter bid or taking a blocking stake in Australian Health Care, the subject of a takeover by Mayne Nickless.
---------------------------
"Only a small proportion of revenues are sourced from the hospital sector in the order of 5 per cent,'' he said. - - - Mayne will transfer the existing pathology and radiology contracts at AHC's Melbourne hospitals from Sonic to its own businesses.
Healthy Prognosis For Mayne
Nickless
Australian Financial Review 11/25/2000
Peter Smedley's decision to align Mayne Nickless's fortunes with the health-care sector was greeted enthusiastically by the market during the week, the stock jumping more than 14 per cent to a 23-month high. - - - - has seemingly turned the company from a perennial underperformer to a company leveraged to an industry in the early stages of development.
----------------------
``We are fully supportive of this strategy, despite the risks, and believe the private hospital industry is still in the early stages of a major recovery,'' commented Ord Minnett.``Our view on Mayne Nickless in recent months has been positive in terms of rapidly improving industry conditions, but cautious given the substantial premium that was quickly assigned to the stock on the back of the Peter Smedley appointment.
``We now believe this management premium will be sustained and that the strong industry fundamentals remain compelling.''
---------------------------
Other brokers were a little more circumspect about the move towards health care.``Longer term we remain cautious on the ability to generate excess returns from the hospital network,'' JBWere said in a research note.
``The strategy presentation indicated that Maynes is achieving a step up in returns by implementing policies that allow them to be a relatively more efficient operator in hospitals.
``Our concern is that these initiatives are creating a relative operational efficiency difference, which can be reduced as competitors lift their operational game, rather than a structural competitive advantage,'' the broker said.
Smedley's Prescription For
AHC by Alan Kohler
Australian Financial Review 11/25/2000
Once Mayne Nickless's Peter Smedley has wheeled Australian Hospital Care Ltd into his operating theatre, anaesthetised it and performed a headofficectomy, his next job will be to persuade a few surgeons to give up golf or at least to play during the week instead of weekends.One of the keys to improving the profitability of private hospitals is to use the operating facilities seven days a week instead of five. Like airlines, modern private hospitals have very high fixed costs, so that ``flying empty'' corrodes profits.
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That is because hospitals are run for, and often by, doctors and they've got better things to do on the weekend than slice up patients. Smedley must teach doctors and patients to give up their weekends, either by paying doctors more or charging patients less for operations on Saturdays and Sundays.
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It is also important for Australia because restructuring at Mayne will spark change throughout the health-care industry, possibly for the better.Apart from using hospital assets more efficiently, there are two things Smedley must do at Mayne to get more profits out of health: first, he must even up, if not flip, the balance of power between private hospitals and health insurance funds; second, he must harness the power of the GPs.
--------------------------
The hospitals have thus been caught in a squeeze between demanding doctors and stingy health funds, and profit margins have plummeted.
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Having a greater share of the nation's sick people is not going to impress health funds. People who are in hospital, which is really what Mayne is acquiring with AHC, are not what health funds want because such patients make claims. The funds want healthy people who pay premiums and do not go to hospital.
----------------------
Market power will accrue to Mayne only if it builds a strong brand awareness and good image among healthy people, so that the funds cannot afford not to have contracts with Mayne for fear of losing paying customers, as opposed to claiming ones. There are only a few private hospitals in Australia that can boast this kind of brand strength.That is why the brand and logo re-launch as part of Smedley's presentations during the week was, in some ways, more important than the apparently meatier AHC takeover.
The AHC acquisition is important, though, in two ways. If it is approved by the Australian Competition and Consumer Commission, it will give Mayne a virtual monopoly on the Gold Coast, which will flip the balance of power against health funds in that area, as well as provide tremendous market power in diagnostics and pathology.
-----------------------
But harnessing the power of GPs is potentially far more lucrative for Smedley and Mayne's shareholders than hospital and pathology rationalisation. GPs are the gatekeepers of the health industry: a group of 20 generates about $50 million a year in health-care expenditure on drugs, pathology, diagnostics, surgery and hospital care.There are two ways for Smedley to tackle the GPs: influence them by providing information technology support and practice management services, or own them. Given Smedley's track record, I'm betting on the latter.
Large corporate medical clinics are among the fastest-growing sectors of the health industry. - - - - - It would not be surprising if Smedley's next move was to act decisively to lead this trend, possibly by taking over Revesco.
The key to unlocking profits in the health industry is to exploit the interaction between GPs, pathologists, radiologists and hospitals in a specific region, not necessarily by achieving national economies of scale. And as Smedley demonstrated in one of his slides at a presentation during the week, GPs are at the centre of the health web.
The health-care business can be seen as a cottage industry run for the benefit of doctors, just waiting for someone to corporatise it. If Smedley is that person, Mayne shareholders will be the winners.
Lang Corp says to pay $47 mln
for Mayne Nickless ports business
AAP News 11/25/2000
Lang Corp Ltd today said it would pay $47 million for Mayne Nickless Ltd's ports business.
Healthy lift in shares.
The Advertiser 11/25/2000
Abstract:-- Australasian Business Intelligence:
This means they have risen 80% since Peter Smedley was appointed CEO on 26 June 2000.
Mayne Job For Smedley: To Turn
Growth Into Performance
The Age 11/29/2000
Perhaps the most telling thing Peter Smedley said last week at the unveiling of Mayne Nickless' strategic review was that, in effect, for a corporate basket case, Mayne was in surprisingly good shape.
------------------------
That makes the task ahead of Smedley and his team quite different from the one they encountered when they arrived at Colonial.
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Mayne's strong market positions and its levels of revenue growth mean that the immediate task is to translate that top-line growth into respectable bottom-line performance.
---------------------------
The over-lapping second, and slightly more complex, phase of the program is to tease out the synergies that ought to be available within Mayne's portfolio of healthcare businesses and even between the healthcare and logistics operations.
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More broadly, the strategy is predicated on creating an acutely cost-sensitive culture throughout the group.
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In healthcare, there are significant synergies available from managing the hospital portfolio, the pathology and diagnostics groups and Mayne medical centres as an integrated healthcare portfolio operating under a common brand.
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Smedley describes hospitals as a network business. In truth, what Mayne has is less a network than a group of regional clusters that can be managed as regional networks. - - - - then layering the head office synergies on to those regional networks offers Mayne the opportunity to reinvent the economics of these businesses.
---------------------
The Smedley analysis of Mayne prompts the question why, if the strategy for improving Mayne's performance was so obvious, it wasn't pursued earlier.The answer probably lies in a mix - - - - and, ultimately, the absence of the absolute single-mindedness, even ruthlessness, that characterises the Smedley approach. Smedley doesn't listen to excuses, let alone accept them.
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In the medium term it involves changing some of the industry dynamics for the healthcare division.Simple scale, better cost structures and the integration of the range of healthcare services ought to strengthen Mayne's negotiating position with the health funds, as would a stronger relationship with the general practitioners who ultimately direct patients into the Mayne catchment area.
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Smedley, - - - - is keen to develop both strands of his new group into the region.That is partly from necessity - there is a limit to Mayne's growth through acquisition in the domestic market both because of the relatively limited opportunities to acquire meaningful businesses and the workings of competition policy - but also because of the scale of the opportunities.
--------------------------
None of the big United States or European healthcare operators has a meaningful presence in the region (Asia) and the local operators are not that large or sophisticated. There is a tremendous opportunity for Mayne to emerge as a powerful regional player and add a long-term growth dimension to its businesses well beyond that available in the domestic market.
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- - - - suggest there is now a realistic prospect that Mayne's latent potential may be about to be unlocked.
Mayne Nickless
Newcastle Herald 12/02/2000
MAYNE Nickless' (MAY) internal review of its operations has found a poor cost culture, lack of business synergies, a confused market identity and poor integration of acquisitions, says Hartley Poynton. Management has 10 initiatives to fix these deficiencies.
Mayne Nickless intends to keep
AHC mostly the same
AAP News 12/06/2000
"The assets and business of AHC Group are complementary to those of Mayne health and Mayne intends to continue to operation of AHC's business," the statement said.
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The company said the changes may result in some reallocation of staff or redundancies, but did not nominate a target figure.
Mayne To Cut Payout Ratio For
Growth
Australian Financial Review 12/07/2000
In a bid to fund growth, health and logistics group Mayne Nickless Ltd plans to cut its dividend payout ratio to 40 to 50 per cent of operating profit after tax, down from the present level of 75 per cent.
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``This target range change is designed to facilitate funding of anticipated growth in Mayne's businesses,'' the company said.
ACCC warns on takeovers.
Herald Sun 12/07/2000
Abstract:- - Australasian Business Intelligence:
The Australian Competition and Consumer Commission says it is carefully examining two takeover bids. The two cases involve bids from Mayne Nickless and PaperlinX. - - - It says the effect on patients and customers must be considered.
Dissenting Duo Stalls Mayne's
Bid For AHC
Australian Financial Review 12/21/2000
Two AHC directors representing Malaysian group Landmarks, which holds 24.4 per cent of AHC, stated in the target statement released yesterday that the bid did not reflect fair value.Landmarks is understood to have bought into AHC at a price above Mayne's cash and scrip alternative bid for the Melbourne-based group.
The other company directors recommended the offer, in the absence of a higher bid.
Mayne Targets Nursing Costs
Australian Financial Review 12/21/2000
Private hospital giant Mayne Nickless is planning a controversial new staffing scheme aimed at slashing costs.The plan has raised strong concerns about damage to the quality of care at Mayne's 46 hospitals across the country, which would be forced to rely more heavily on lesser-qualified nursing staff.
According to one executive, who did not want to be named, the company has targeted cost savings of between $15 million and $30 million a year, or 5 to 10 per cent of nursing costs.
The Australian Nursing Federation has attacked the move. Its federal secretary, Ms Jill Iliffe, said yesterday: ``The changes will have a devastating effect on the quality of care.
``It is unthinkable that so much public money is going into private health insurance at the same time private organisations are trying to cut costs and reduce services.''
An internal company document, dated November 2000, outlines a plan to restructure its hospital care, with much greater reliance on nurses who provide ``lower'' levels of care, such as assistants in nursing (AINs).
While registered nurses require at least three years of formal training, AINs are not required to have any formal training.
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Mayne Nickless's public affairs manager, Mr Andrew Scannell, confirmed late yesterday that the company was considering changes to its model of nursing care but denied specific cost-saving targets.
---------------------
According to Mr Scannell, the company strategy is to increase the number of full-time nurses, and reduce reliance on agency nurses which would save money.``Any model wouldn't be about cost-cutting, it would be about maintaining and enhancing patient care,'' he said.
The confidential Mayne document outlines a company plan to rely more heavily on AINs and other staff less qualified than RNs. It talks of a ``shift away from the mandate that the RN is responsible for the total care needs of the patient''.
Mr Scannell told The Australian Financial Review: ``Any model would be based on a team approach in which RNs provide clinical care, and other team members provide appropriate support to RNs.''
Changing the mix in the hospitals, which operate under the banner of Health Care of Australia, towards less qualified staff would clearly save the company money, but may provoke strong reactions from qualified nurses, whom Mayne already has trouble attracting.
``It makes no sense, at a time when hospitals are dealing with patients with more complex care needs, to change the skills mix to employ less qualified people,'' Ms Iliffe said.
``It's a recipe for disaster, and consumers should be up in arms about it.
``We will resist any major cuts to nursing budgets, right across the country.''
The internal Mayne document predicts nursing resistance will pose the greatest risk to the changes. It then details psychological methods of convincing staff to accept the new model.
``It is necessary to identify and work with those opinion leaders who will support the innovation and be ready for `damage control' for those who will not support the change.''
----------------------
Those familiar with the company's operations say Mayne's hospitals already operate ``close to the bone'' in terms of their nursing staff.According to nursing union officials across the country, any move to introduce less qualified staff and slash budgets could easily backfire, with the company finding it even more difficult to attract and keep qualified staff.
*Mayne may alter AHC bid after
director objections
AAP News 12/21/2000
They also objected to the 90 per cent acceptance condition and questioned the sustainability of Mayne's share price in the absence of a full merger.
Malaysians stymie Mayne buy.
The Australian 12/21/2000
Abstract:-- Australasian Business Intelligence:
Mayne Nickless' bid to acquire Australian Hospital Care (AHC) may fail in mid-December 2000. Two directors of Malaysia's Landmarks Berhad, - - say that Mayne's offer falls short of a net asset value of $A1.25 per share.
Takeovers - Dec 23
AAP News 12/23/2000
Mayne Nickless will formally offer for all of the company's shares not already held.
Nursing Arrangements Not About
Cutting Costs: By Megan
Canberra Times 12/24/2000
MAYNE Nickless, owner of Canberra's National Capital Private Hospital, says its plans for new nursing staff arrangements are about improving patient care, not cutting costs. - - - - Mayne Nickless's public affairs manager, Andrew Scannell, said those figures were not correct.He said the company did intend to try to save money by hiring more full-time nurses and using fewer agency nurses but it was impossible to estimate the savings. Mr Scannell said assistants in nursing had three months' training and did basic duties such as changing beds and cleaning. He said registered nurses, who had at least three years' training, should not be doing menial tasks that could be performed by assistants in nursing.
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''In any of our hospitals no-one is performing duties above what they are qualified to do,'' he said. Mayne Nickless was not subjecting hospitals to an overall, formal review, he said.
Health Care A Team Effort
Australian Financial Review 12/28/2000
The Australian Nursing Federation is running an unfounded scare campaign, both through your newspaper ("Mayne targets nursing costs'', AFR, December 21) and other media, based on an old-fashioned model of health care.Modern health care delivery demands a team approach.
Our union is one of the largest health unions in this country, so we were most interested in the reported planned reforms by the major hospital provider, Mayne (formerly Mayne Nickless), and the comments on these reforms from the ANF.
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The changes in health practice and technology have resulted in our members working alongside many doctors and other skilled people, who work together as a team in the type of modern hospitals that Mayne runs in Australia.We do not believe that either AINs or RNs would appreciate the self-serving, sectoral approaches now being taken by the ANF as reported in the media.
The LHMU Health Union represents a wide range of workers in the health industry, including enrolled nurses, assistants in nursing, personal care assistants, orderlies, cooks, cleaners, security personnel, gardeners and maintenance staff more than 150,000 hard-working women and men in Australia.
Healthcare And Utilities
Rule
Australian Financial Review 12/28/2000
Healthcare, and infrastructure and utilities stood above the crowd in 2000 as investors turned their backs on tech stocks and cyclical sectors fell on concerns of an economic slowdown.
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It was only eight months ago that infrastructure and utility companies were market wallflowers, unloved and neglected by a market infatuated with the new economy.
Mayne Bid Still Healthy
Australian Financial Review 12/29/2000
Transport and health-care group Mayne Nickless' $330 million bid for Australian Hospital Care remains likely to succeed, despite a key AHC shareholder reportedly saying that a rival bid is possible.
Mayne Set To Pay Up As Nurses
Move On
Australian Financial Review 01/11/2001
Australia's biggest private hospital operator, Mayne Nickless, is understood to have struck a lucrative new wages agreement with nurses in its home state of Victoria as it fights to stem the exodus of staff to the public sector.
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Yesterday, Ms Belinda Morieson , the secretary of the Victorian branch of the Australian Nurses Federation, warned that some hospitals faced losing up to 20 per cent of their staffs to the public sector in the wake of the lucrative public sector agreement signed with Victorian Government late last year.
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Mayne Nickless is looking to cut up to $30 million from its staffing costs as it looks to boost the profitability of its hospital division.
Mayne says ACCC's position to
stifle private hospital sector
AAP News 01/17/2001
Mayne Nickless Ltd today said the Australian competition watchdog's stance on the company's bid for Australian Hospital Care Ltd did not support the development of a robust private hospital sector as a competitive alternative to the public system.Mayne Group managing director and chief executive Peter Smedley said preserving the status quo in Australia's private hospital sector would be contrary to public interest. - - "seems illogical given the bipartisan political support for the private sector to share a degree of the investment and operational burden for healthcare with the Government-funded public sector," he (Smedley) said.
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"The acquisition is likely to result in a substantial lessening of competition in Melbourne and on the Gold Coast in various markets relating to the provision of private hospital services," acting ACCC chairman Rod Shogren said in a statement."The impact of the acquisition could well be an increase in prices and/or a reduction in service quality."
Shares in Mayne dive on ACCC's
rebuff of AHC bid
AAP News 01/17/2001
The Australian sharemarket carved another 3.93 per cent, or 20 cents, off shares in Mayne Nickless today after Australia's competition watchdog stalled the private hospital operator's bid for Australian Hospital Care Ltd (AHC). - - - continues an uninterrupted two-week slide for Mayne from $5.75 on January 5.
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The ACCC voiced concerns about the risk of price increases and reduced service quality should the Mayne bid for AHC be successful.
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"Without strong private hospital operators, there will be no countervailing force to the dominant position of the health funds."
Watchdog Bites Mayne
Nickless
Australian Financial Review 01/18/2001
The Australian Competition and Consumer Commission said it opposed the takeover bid because it would leave patients, doctors and health funds with practically no choice in hospital services on the Gold Coast and parts of Melbourne.
------------------------
ACCC commissioner Mr Ross Smith said the regulator's concern had been heightened because Mayne Nickless and Australian Hospital Care were the two largest for-profit private health-care providers.``We're not adverse to acquisitions and mergers that will lead to improvements in efficiency, but we're fairly concerned about acquisitions that would lead to a situation where the merged party gets such a degree of market power that they can start raising the price and there's just no competitive restraints on them,'' Mr Smith said.
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Mayne Nickless said the ACCC position appeared illogical, arguing that consumers had a sufficient choice of health-care providers, including the public system and charity-run hospitals.``It will be difficult for the Australian private hospital sector to grow until it is evident that a reasonable level of return is achievable,'' Mayne's managing director, Mr Peter Smedley, said.
-----------------------
The decision to oppose the merger was welcomed by doctors and health insurers.The Australian Medical Association's deputy federal president, Dr Trevor Mudge, said that the ACCC should continue to focus on moves by large corporations to reduce competition rather than targeting individual doctors who share a practice and charge the same fees.
Landmarks plans to accept
improved offer from Mayne for AHC
AAP News 01/18/2001
Malaysian healthcare company Landmarks Berhad today said it plans to accept an improved takeover bid from Mayne Nickless Ltd for its 24.4 per cent stake in Australian Hospital Care Ltd, the company said today.
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But Landmark's general manager Mohamad Abdul Halim Ahmad told in an interview that the company would agree to an offer from the healthcare company of almost $1.64 per share.
Mayne reconsiders AHC bid as
Landmarks stands by to sell
AAP News 01/18/2001
Mayne Nickless Ltd was rethinking its bid for Australian Hospital Care Ltd as recalcitrant majority shareholder, Landmarks Berhad, today said it was finally willing to sell its 24.4 per cent stake."We're in a trading halt at the moment. We are considering a possible variation to our offer for the ordinary shares and options of AHC Ltd," a Mayne spokesperson said.
"Pacman" snaps at blocked
bid.
The Courier-mail 01/18/2001
Mayne Tipped To Lift Bid
The Age 01/19/2001
Mayne Nickless may boost its offer for Australian Hospital Care to as much as $1.64 a share, AHC major shareholders forecast yesterday.
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A spokesman for Mayne Nickless said he was aware of the statements made by Landmarks but was unable to comment. ``All I can say is that we are considering a possible variation to the terms of the offer,'' he said.
Mayne Poised To Increase AHC
Offer
Sydney Morning Herald 01/19/2001
Mr Smedley has described the ACCC's stance as contrary to the public interest.
AHC Scrip Offer Secures
Landmarks Deal For Mayne
Australian Financial Review 01/20/2001
Mayne Nickless has cleared a significant obstacle in its protracted takeover battle for Australian Hospital Care Ltd, with an additional scrip offer clinching the support of AHC's largest shareholder, Malaysian group Landmarks Bhd.
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Analysts and industry observers expect that Mr Smedley will have to offload a number of hospitals in Melbourne and one on the Gold Coast if the bid is to receive the blessing of the ACCC.
Mayne's success leaves market
and industry players cautious
AAP News 01/30/2001
Australia's competition watchdog may have given a green light to Mayne Nickless Ltd to take Australian Hospital Care Ltd (AHC) today, but the market and industry players still harbour doubts about the deal.
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Mayne is to sell four hospitals within 12 months - Allamanda on the Gold Coast, Queensland, and Northpark, Mitcham and South Eastern private hospitals in Melbourne - reducing the number of its hospital beds in Melbourne by 308.
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"This outcome means that Mayne Nickless will increase its size and be able to improve its efficiency without causing a substantial lessening of competition in areas where its overlap with AHC had been greatest," he (Alan Fels) said.
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"The question now is what they will do with the $200 million in cash still on their balance sheet."
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Chief executive of Cabrini Hospital in Melbourne, Roger Greenman, said the move probably foreshadowed further mergers or acquisitions in the sector."I think the smaller hospitals are going to struggle. There's not much in this market now. The margins are very small," he said.
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However Australian Health Insurance Association chief executive Russell Schneider said while the association was pleased the ACCC had secured the divestments, it remained unclear whether the disposals would provide bona fide competition to the merged entity.Mr Schneider said the association was also concerned about `one in, all in' deals whereby Mayne sought to establish one contract with all hospitals in the group
Canada Next Up For Mayne
Australian Financial Review 01/31/2001
The chief executive of Mayne Nickless, Mr Peter Smedley, is set to review the future of the company's Canadian logistics business after Mayne cleared the last major hurdle yesterday in the $330 million takeover of Australian Hospital Care.
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Mayne Nickless has agreed to sell the Allamanda hospital on the Gold Coast and three Melbourne hospitals: Mitcham, Northpark and South Eastern.
Mayne Agrees To Hospital
Sell-off To Achieve Takeover
The Age 01/31/2001
At the time, Mayne chief Peter Smedley launched a stinging attack on the ACCC, saying the decision appeared to be ``contrary to the public interest'' and ``illogical''. The bid was also stalled by the refusal of 24.4 per cent Malaysian shareholder Landmarks Berhad to accept the offer.
Watchdog gives Mayne green light
in chase for AHC.
The Australian 01/31/2001
Abstract:- - Australasian Business Intelligence:
The Australian Health Insurance Association has opposed the Mayne-AHC merger due to its effect on competition in the healthcare sector.
The Mayne Game
Business Review Weekly 02/16/2001
At face value, Smedley seems to have achieved a lot: he released a strategic blueprint for Mayne Nickless after just 10 weeks in the job; he sold the company's express courier business in Britain and its port operations in Australia; and he successfully bid $380 million for Australian Hospital Care (AHC) to consolidate the position of Mayne Nickless as the largest private hospital owner in Australia.His blueprint is remarkably similar to one proposed by his predecessor, Bob Dalziel, in May last year (BRW, July 14).
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Smedley has confirmed to the market that Asia will play a substantial role in expansion opportunities for Mayne Nickless, and that big savings and efficiencies will be made by using e-commerce in the health-care business. To complete the plan, all Smedley has to do is sell the Canadian business (analysts say this will happen soon) and develop a vertically integrated health-care business, a plan that includes creating a new health fund, buying a health fund or forming a strategic alliance with a few health funds.But following somebody else's plan does not guarantee success. Luck, management style and credibility all play a part, and Smedley has all three in spades.
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Smedley has also put his mark on the culture of Mayne Nickless by sacking most senior executives and replacing them with former colleagues from Colonial Bank, and by clearing out some of the middle layers of management.But the real key to success lies in solving the mess in the health-care system and learning how to deal with the health funds to win a larger share of their business and improve margins.
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Mayne Nickless is rumored to be planning to buy the Medibank Private health fund, or to set up its own health fund, thereby creating a vertically integrated health-care business.
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If Smedley can build a vertically integrated health-care business, the sky will be the limit, because the company will not be held hostage to the whims of the private health funds to refer patients to the hospitals. If he cannot, Mayne Nickless will be another over-priced stock without the fundamentals to justify the premium. It will also make a lot less attractive the two million shares issued to Smedley.THE FIRST SIX MONTHS
What Smedley has done at Mayne Nickless:
* Released a strategic blueprint for Mayne Nickless within 10 weeks of taking the helm.
* Sold the British express courier business interests Parceline and Interlink for $535 million.
* Sold the Australian port operations for $47 million.
* Overhauled senior management.n Made a placement to institutions of $197 million.
* Made a successful takeover of Australian Hospital Care.
* Pushed the share price up 84%.
Mayne Nickless A Little Out Of
Sorts
Australian Financial Review 02/19/2001
After ending 2000 on a high with its plans for a blitzkrieg on the private hospital market, Mayne Nickless has come off the boil. ----------------------------------
Most analysts still seem fairly upbeat about the company and believe that, for the first time in many years, the former industrial dinosaur may create some value for its long-suffering shareholders.
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Combined with improved capital management and continuing cost rationalisation, there are a number of brokers who can see value in the stock above $6.
Nurses Give Mayne A Bitter
Pill
Australian Financial Review 02/22/2001
Mayne Nickless has been dealt a major blow in its attempt to slash $30 million from costs through a radical shake-up of nursing practices in Victorian private hospitals, after making a raft of industrial relations concessions.
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A Mayne Nickless spokesman confirmed the group had reached agreement with Victorian nurses on how its proposed collaborative nursing care model would be implemented. He declined to give details.However, representatives of the Australian Nurses Federation said they had won ``significant concessions'' from Mayne Nickless in its home State of Victoria and similar agreements were expected to follow in other States.
``They won't be making any cost savings out of nurses,'' said Ms Belinda Morieson, secretary of the Victorian branch of the federation.
Concessions had been gained on career structures, workloads and the extended use of non-nursing staff, she said.
Nursing costs, which make up more than half of all hospital costs, have been identified by Mayne Nickless as a key source of potential cost savings.
The Victorian agreement comes on top of a lucrative new pay rise for Mayne Nickless nursing staff aimed at stemming the exodus of its nurses to the public system. Mayne Nickless nurses recently voted to accept a 12.5 per cent pay rise over three years, similar to an agreement struck last year in the public system.
Mayne posts inteirm net profit
of $118.5 mln
AAP News 02/28/2001
Mayne Nickless Ltd today reported a pre-abnormal interim net profit of $118.516 million, compared to $42.002 million on last year.
Mayne says not interested in
owning private health funds
AAP News 02/28/2001
Chief executive of Mayne Nickless Ltd, Peter Smedley, said today that the private hospital operator was not considering ownership of any private health funds.
Consolidation is the name of the
game for Mayne - for now
AAP News 02/28/2001
Healthcare and logistics group Mayne Nickless Ltd is eyeing more acquisitions after today announcing a strong jump in first half net profit.And high profile chief executive Peter Smedley brushed off suggestions Australia's largest private hospital operator has plans to takeover additional hospital groups and health funds, confining potential takeover targets to Asian logistics operators.
"I haven't specifically decided what areas are more attractive to us. We're value acquirers, and we'll be looking for value in any particular opportunity there is," he said.
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But a one-off abnormal gain of $72.4 million for the divestment of its UK Express business saw the group's net profit collapse to $46.1 million in line with analysts' expectations.This compared to $46.9 million for the previous corresponding period,
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"We expect returns from hospitals to be exceeding the cost of capital by December 2002, and that these returns will be sustainable," he said.
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Mr Jenkins also rebuffed speculation Mayne was set to divest its Canadian logistics assets. - - - - "Our Canadian assets are the best in the market place. We are impressed with the way they function."
Mayne Nickless On $1bn
Acquisition Trail
Australian Financial Review 03/01/2001
Mayne Nickless is on the hunt for acquisitions worth up to $1 billion after yesterday unveiling a mixed interim result that was boosted by strong revenue growth from its core hospital operations.
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More earnings growth is expected as the benefits of increased take-up of private health insurance flow through the sector.
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- - - increasing speculation that he wants to build a comprehensive national hospital network.After a recent $197 million equity raising, Mayne's gearing stood at just 14.6 per cent, giving the group substantial flexibility to grow organically and through acquisition.
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Margin contraction in medical imaging was blamed on Federal Government fee cuts since September 1999 and loss of funding on several expensive magnetic resonance imaging machines.
Six Months On, Smedley's Mayne
Is Looking Healthier
The Age 03/01/2001
Peter Smedley and his team may have been in place at Mayne Nickless for only six months, but already they are teasing out the shape of something quite promising.
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While the results were a major recovery from Mayne's nadir in the June-half last year, that result was colored by the ``new broom'' effect as Smedley cleared the decks with brutal writedowns and, no doubt, very conservative accounting. - - - a frenetic burst of pre-Christmas activity - - - - also cut a swathe through the former management. The spate of dealings has left Mayne near debt-free, with a more coherent asset base, flatter management structure and clearer strategy for its twin core businesses of health care and logistics.It also appears to have left it with a solid core of earnings and some momentum. Underlying earnings before interest and tax rose 11.4 per cent on sales revenue, which increased 7.6 per cent, an indication that the first phase of Mayne's savage cost-cutting program is having an effect.
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The second phase, already under way, relates to the integration and process redesign of Mayne's businesses, particularly the networking of its health-care operations. Mayne's problems in recent years - - - - but to its inability to control its costs. Smedley is attacking the Mayne cost base from every side and, in the process, is starting to open up its margins.He also has more complex efficiency programs running through every aspect of the group's operations, some of which are already starting to show up in the metrics of Mayne's businesses, particularly health care. There has been a notable pick-up in the performance of the hospitals in particular, which is the key to Mayne's performance. The hospitals have been a major drag on its results.
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Mayne had a lot of capital tied up supporting underperforming assets.Smedley appears to be turning that situation around, partly through luck, but more importantly by good and clever management.
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The strategy of operating the entire health-care business as a network does, however, appears to be helping to improve efficiencies and is generating better yields from the higher volumes being experienced.
Upbeat Mayne Set To Expand
The Age 03/01/2001
Mayne Nickless chief executive Peter Smedley has signalled the once-struggling health-care giant is set to expand again, hinting yesterday he was confident there would be few regulatory hurdles.
---------------------------
``Offshore, there are attractive prospects for long-term growth in Asia where the political environment encourages investment in the private health system and there is an increasing demand for private health-care services,'' he (Smedley) said.
UK sale lifts Mayne 180pc.
The Advertiser 03/01/2001
Abstract:-- - Australasian Business Intelligence:
Mayne's principal strategies will remain the elimination of duplication, and expansion into Asia. Its previous 115 brands have been replaced by a single corporate brand.
Mayne fighting fit and on
prowl.
The Australian 03/01/2001
Abstract:-- - Australasian Business Intelligence:
It is generally believed that the company could spend up to $A700m on acquiring new assets that will probably be in the health-care area.
Smedley tries his Colonial cure
on Mayne.
The Australian 03/01/2001
Abstract:-- - Australasian Business Intelligence:
Smedley's aim, according to a 1 March 2001 report, is to make Mayne Nickless an efficient provider of medical services.
Mayne Back On The Hunt
The Age 03/01/2001
Smedley Hits Diagnostic
Pricing
Australian Financial Review 03/09/2001
Last week Mayne Nickless produced an asset-sale led turnaround in interim net profit of $118.5 million even before it began to negotiate new contracts with the health funds for next financial year.But Mr Smedley warned that there was no guarantee that present levels of private health insurance membership could be maintained.
He also said that some pathology and radiology assets were overpriced.
Radiology and pathology groups MIA, Sonic Healthcare and I-Med have been rapidly consolidating the industry in the past few years, and the majority of the pathology operations are now corporatised.
------------------------
In recent weeks, Mayne Nickless has negotiated a new wage platform with nurses and struck an ``amicable agreement'' with the Victorian branch of the Australian Nursing Federation over nursing responsibilities.
Mayne On Hold On Purchases
The Age 03/09/2001
Mayne Nickless chief executive Peter Smedley may have to put his well-publicised hunt for acquisitions on hold after describing the local imaging and pathology sectors as overpriced.Speaking at a business lunch in Melbourne yesterday, Mr Smedley - - - - - said Mayne would focus on organic growth in the meantime. - - - - raising speculation that the group might pursue other health-care assets. - - - there was an ``oversupply'' of hospital beds in Australia.
-----------------------
Despite this, analysts remained confident hospitals would stay on Mayne's purchasing agenda.``There are market rumors that they (Mayne) could be chasing pharmaceuticals,'' said Johnson Taylor Potter's head of stockbroking, Julie Davidson. ``But with a gearing of around 14 per cent, the primary focus is to build value within the business.''
-----------------------
Mr Smedley also called on private health funds to share the spoils of the Federal Government's lifetime health-cover initiatives, which have resulted in a surge in potential customers.
Smedley voices concern at
hospitals' forced cost cuts.
The Mercury 03/09/2001
Abstract:-- - Australasian Business Intelligence:
Smedley said on 8 March 2001 that investment in private hospitals may be compromised if operators are forced to make continued cuts to costs.
Prices hold up Smedley.
The West Australian 03/09/2001
Abstract:-- - Australasian Business Intelligence:
Inflated asking prices for medical imaging and pathology firms have inhibited Mayne Nickless's expansion plans in Australia.
Health Risks For Packer And
Smedley
Australian Financial Review 03/10/2001
There are some big corporate elephants staking out territory in the government-funded health industry. They should remember that it can be a fickle and inflexible business in which the Government can just as easily dish out pain.Two of the country's most powerful business identities, Mayne Nickless chief Peter Smedley and Consolidated Press group boss Kerry Packer, are engaged in a tussle over the $3.5 billion market for general practice medical advice. Over the past three months representatives of Mayne Nickless have been quietly approaching doctors that own large general practice clinics around the country, offering millions for some practices.
The move by Mayne - already the country's largest private hospital operator and second largest pathology group - came swiftly after the appointment last July of Smedley as chief executive. It also followed quickly behind the $75 million capital injection by Kerry Packer's Consolidated Press Investments and a group of other investors in Garry Garside's Perth-based Endeavour Health Care Group.
---------------------------
Several forces are behind the acquisition of doctors' clinics by large health care companies. One big force has been shrinking opportunity to expand in pathology and diagnostic imaging. --------------------------------
Another force is the race for scale economies. With continuing cuts in federal government rebates on pathology and imaging, some health care companies are seeking to lock in revenues for their pathology and imaging laboratories by owning a group of in-house referring doctors.Of all the health care groups, Mayne Nickless is the most advanced in pursuing the vertical integration model. Mayne's "health care network" business model sees big synergies from owning general practice clinics, pathology and imaging labs and private hospitals under one roof, with each part of the network generating additional revenue for other parts of the group.
Not everyone shares the big health corporations' enthusiasm for company-managed clinics. In the United States the two largest operators of general practice clinics - - - - went bankrupt last year.
---------------------------
Enthusiasts for corporate clinics argue that the US experience won't be followed in Australia. In the US health insurance funds are the primary provider of revenue to GPs, and the funds are notoriously fickle customers.
-----------------------
While buying a "captive market" of referring GPs may be part of the answer in the long run, for big pathology and imaging groups such as Mayne, Sonic Healthcare and Medical Imaging Australia there is relentless short-term pressure to increase volumes and efficiency.
--------------------------
The fact that prices can fall faster than costs seems to have given some investors - who mistook the diagnostics industry for a welfare scheme for the rich - a nasty surprise.
------------------
In most industries, companies have a variety of tools and strategies with which to respond to margin squeezes. But few traditional business strategies work in pathology or imaging.Discounting (to drive competitors out of the market) won't work because the customers delivering business volume (GPs) are not price-sensitive (as the Government pays the bills).
Paying cash or other inducements to referring GPs is illegal, and could result in jail time. But the temptation to offer inducements is great. I'd venture that it won't be long before a major pathology lab is in trouble with the law over inducements.
Geographic expansion (invading a rival's territory to steal volume) isn't a realistic option either. The Government has capped the number of licensed specimen collection centres or licensed imaging machines granted to each pathology lab or imaging clinic.
--------------------
While takeovers don't offer huge savings, and the prices being asked by vendors are astronomical, right now they're the only sure-fire way to maintain profit margins. But the number of targets is shrinking fast.
-------------------
Regardless of who ends up owning the lion's share of the $12.5 billion federal Medicare rebate pie, it will be surprising if there isn't some form of political backlash to the growing concentration of ownership.
----------------------
Life can be sweet indeed for the company which makes a living by - quietly and unobtrusively - swinging off Ma Government's teat. But when big companies are seen to be too greedy - as the recent Pharmaceutical Benefits Scheme brouhaha revealed - the public backlash can be severe.Australia's major listed health-care providers have done a good job of protecting their shareholders' interest to date. But I wonder if they are really prepared for what happens when life gets interesting in Canberra.
The Wrong Stuff
Australian Financial Review 03/24/2001
The explosion of cross-border and cross-industry CEO hirings reflects a massive change in the way that big companies are choosing executive talent. Once the tried and true formula for climbing to the top of the corporate heap was to accept all challenges, work long hours and display unwavering loyalty to the company. But the old formula - and especially the bit about loyalty -has been scrapped. Corporate loyalty and detailed inside industry knowledge are now merely peripheral criteria for selecting the CEO.They have been replaced with a set of values that would have been seen as supercilious - perhaps even degrading - to yesterday's generation of managing directors. Key indicators of a CEO's suitability in the new paradigm are presentation and communications skills and - although various euphemisms are used to disguise its real nature - the thick skin and ruthlessness required to implement massive workplace changes.
The communication skills are necessary to sell a company's virtues to an increasingly jaded investment community, a group willing to seize on any vulnerability and hammer a company's share price.
----------------
In the most extreme version, the new CEO is thus part Viking, part vaudeville entertainer. After lopping off heads all day long, he or she has to be able to do a song-and-dance routine that extols his or her exploits in front of a raucous, cynical and part-drunk audience of fund managers.The reward is to double or triple your net worth in three or four years - the shortened life span of the new CEO - and to retire in a level of comfort once reserved exclusively for hereditary monarchs.
---------------------------
The change in board preferences stems from rising demand from institutional fund managers for higher returns on shareholders' equity.
----------------------
The trend to the generalist change-agent manifested last July in the appointment of Peter "Pac Man" Smedley as CEO of health-care and logistics group Mayne Nickless. Having worked for Shell (petroleum products) and Colonial (life insurance and funds management), at the time he was hired, Smedley's knowledge about private hospitals, pathology, trucking and warehousing would have fitted snugly inside a thimble.Smedley reputedly won the Mayne job because of his crash-through-or-crash operating style and his fearlessness in using mergers and acquisitions as rationalisation tools. The Mayne board replaced Smedley's predecessor, Bob Dalziel, not because of differences over strategy but over speed of implementation. The ability to implement - not strategy or industry savvy - won Smedley the job.
------------------------------
If you were to single out one force behind the triumph of the Rambo-in-pinstripes generalist over the home-grown specialist in the CEO stakes, it is this: globalisation.
-------------------
Globalisation devalues local knowledge and experience. It increases the value of those who can think and act quickly in response to the unexpected.
---------------------
"International experience is becoming more and more important," says Jon Nicholson, a director and vice-president of Boston Consulting Group. "If you look at the next generation, people who have spent the entirety of their careers in one country will really struggle. Boards are looking for people who have lived in a more complex competitive environment, people who have more contrast in their experiences, and people who have succeeded in another organisation and another culture."
---------------------------
Nicholson says a big break from the past has been the tendency of boards to set specific performance tasks - which may include mergers and acquisitions and offshore expansion - and for completion of such tasks to be linked to pay. - - - - Chief executives are hired to achieve those goals and then they are expected to move on."The most important goal of all, says Nicholson, is to meet absolute profit targets.
-----------------------
"I think that the new management generalists are doing a far better job for their shareholders than ever before, and that's because they are not in love with the industry they grew up in."Frankly, we don't care which industry Australian companies are hiring their chief executive from. The question is whether they have proved themselves and whether they can compete in an international environment. After that, just about everything else is irrelevant."
The Mayne Man.
The Australian Financial Review 04/02/2001
Abstract:-- - Australasian Business Intelligence:
It is said to be approaching doctors near its hospitals with offers to acquire their practices.
Mayne Nickless shares slip on
Parkway speculation
AAP News 05/07/2001
Shares in healthcare and logistics operator Mayne Nickless Ltd slipped to a two month low today on speculation the company may be set to purchase a stake in Parkway Holdings Ltd.
----------------------
Market speculation is centred on a possible purchase by Mayne of CapitaLand Ltd's 16.7 per cent stake in Parkway, a Singapore-based hospital operator.However analysts said such a move was unlikely.
Mayne Pursues Pricey Parkway
Australian Financial Review 05/08/2001
Singaporean hospital and property group Parkway Holdings is a strategically enticing entry point to the Asian health-care market for Mayne Nickless medicine man Peter Smedley.Yet the fact remains that the underlying performance of Parkway has been sub-standard and it is trading at 28 times forecast 2001 earnings hardly a bargain basement buy.
----------------------
If Mayne bought the stake, one could only assume a full takeover, given the record of Smedley, who has a dislike for holding minority positions.
-----------------------
As the largest private hospital operator in Asia, a region pregnant with potential given the rising standards of living, Parkway is a sensible but expensive opportunity.
Smedley Has A Healthy
Outlook
Australian Financial Review 05/23/2001
Mayne Nickless's chief executive, Mr Peter Smedley, has launched an ambitious behind-the-scenes battle to establish the country's first fully integrated health-care services provider.Investors have backed Mr Smedley on faith, given Mayne's mixed half-yearly results published in February.
---------------------------There have also been suggestions Mayne will make several bolt-on hospital acquisitions in coming months and even approach State and Federal governments about running selected public hospitals.
Of less public interest but of equal importance to the company's future, Mr Smedley has restructured the management of the health-care operations, shortening the chain of command between its hospital network and the company's modest Melbourne head office.
--------------------------
It is easily the country's biggest private for-profit health-care provider and its every move is watched by the evolving industry.
-----------------------
Further, the Federal Government and the Federal Opposition have committed to maintaining the lifetime cover initiative, despite its $1.7 billion annual price tag, giving some certainty to its outlook.
-------------------------
``This would sustain the recovery in listed hospital operators and open the door to capital markets for mutual health funds and not-for-profit hospitals,'' Salomon Smith Barney said recently.
--------------------------
But some analysts are still worried about political risk in an industry dominated by powerful doctor and nursing lobby groups.
---------------------------
Earlier this year, Mayne Nickless was forced to give its registered Victorian nurses a 12.5 per cent pay rise over three years, similar to an agreement struck last year in the public system. When concessions to entitlements such as maternity leave are considered, the increase is still higher.Hospital operators say Mayne is having less success than it would like in buying a presence among the country's 6,500 GP practices, as doctors are often wary of closer links to corporates. This is despite the establishment of relationship managers to help keep Mayne popular with GPs and specialists.
Mayne Nickless says intends to
acquire
AAP News 05/31/2001
Mayne Group managing director and chief executive officer Peter Smedley said the offer to Faulding shareholders provides a significant premium to Faulding's current share price and unlocks value in their holdings.
Australian health sector
fighting fit as takeovers mount
AAP News 05/31/2001
Australia's $5 billion private health sector has never been fitter.After more than 2.5 million people signed up to private health funds last year industry advocates claim it is set for one of the most profitable and rewarding decades ever.
--------------------------The optimistic outlook for the sector has prompted a spate of takeovers in the industry with Mayne's $2 billion swoop for FH Faulding & Co Ltd today just the latest.
Most of the action has been firmly focussed on private hospitals with Alpha Healthcare Ltd last week submitting to a $64 million bid from Ramsay Healthcare Ltd while Mayne wrapped up a $300 million bid for Australian Hospital Care (AHC) in January.
----------------------------
Analysts have predicted a long period of rationalisation of the industry which is still largely in the hands of not-for-profit, church and charity organisations."Those smaller players, with only one of two hospitals are going to find it increasingly difficult to operate in an industry with some pretty big players," an analyst said today.
The Pacman wades into the fray
again, targets Faulding
AAP News 05/31/2001
Peter Smedley will go down in Australian corporate history as one of the great deal makers of his generation, and not without reason.His ability to put together a proposition and follow through to the benefit of all stakeholders has made his achievements in Australian business over recent years almost unparalleled.
Today's bid to buy pharmaceutical and health care group F.H. Faulding & Co Ltd for up to $2.0 billion only serves to reinforce Mr Smedley's ability to seek out acquisitions.
---------------------------
The decision to join the country's leading health care company also was well timed with changes to Government funding arrangements and other industry changes making it one of the hottest sectors on the market over the past year.
----------------------------
Whether he can repeat past glories with today's Faulding deal only time will tell, but if history is any indication Mayne Nickless shareholders are likely to be the big winners.
Mayne makes agressive $2 bn
scrip swap bid for Faulding
AAP News 05/31/2001
"Pacman" Peter Smedley surprised the market today with an aggressive takeover bid for pharmaceutical company FH Faulding & Co Ltd, designed to make Mayne Nickless Ltd Australia's leading health care provider.The Mayne Nickless chief executive, known as the Pacman because of his ability to swallow other companies, has targeted the Adelaide based group witha two tiered scrip offer that values Faulding at up to $2.0 billion.
------------------------
However Mayne's ability to persuade Faulding shareholders to accept the offer may depend upon the sale of the company's oral pharmaceuticals unit.Mayne does not want the US based business, but instead is seeking Faulding's healthcare operations, which service hospitals and pharmacies, and its injectable pharmaceutical products unit.
------------------------
Mr Smedley said that Mayne Nickless believed the US Oral Pharmaceutical business was worth more to an existing generics manufacturer with a US presence.
-----------------------
Mr Smedley said a combined Mayne Nickless and Faulding would enhance Mayne's position as the leading healthcare provider in Australia."It will be the leading Australian logistics business geared to servicing the health sector, and a significant supplier to hospitals in Australian and internationally," he said.
----------------------
While the company was unavailable today, the bid was believed to have been unsought.
-----------------------------
Mr Low said the price offered for the injectables and healthcare businesses was "pretty cheap", adding "we think Faulding is likely to reject it."
On The Ball In The Mayne
Game
Australian Financial Review 06/01/2001
Notch up yet another deal on the M&A chalkboard for the dynamic duo of Mayne Nickless boss Peter Smedley and his inimitable Morgan Stanley corporate adviser Rick Ball.The two-tiered scrip bid for FH Faulding & Co, coupled with the sale of the United States generics division for $US550 million-plus ($1 billion-plus), has turned heads.
---------------------
In some senses, the $2 billion all-scrip offer is cheeky, being a pre-bid premium of only 15 per cent.
-----------------------
The legions of disgruntled Faulding investors might say ``what the heck'' and accept.If he pulls off a 100 per cent scrip takeover, Smedley is in an enviable position to expand Mayne's diagnostic presence and its GP management services.
-------------------
If it offloads generics, it will be drowning in cash. That gives it the ability to launch into Asia, either organically or through buying the likes of Singaporean group Parkway Holdings.
Smedley Scheming And Dreaming
...
Australian Financial Review 06/01/2001
The Pacman likes flexibility and Mayne Nickless boss Peter Smedley's low-ball bid based on his fully priced scrip is aimed at flushing out a higher bid or, in his dreams, success through Faulding shareholders' total frustration.Most takeover bids are conditional on targets not selling assets, but this one rewards Faulding chairman Alan McGregor's shareholders if the company sells its potentially best business.
The market has long believed Faulding is in play, but on the most generous interpretation, buyers are wary of bidding for its US oral drug business, which accounts for 36 per cent of earnings, because of the risk that they couldn't sell the Australian business. Smedley has taken that risk off the table.
--------------------------------
These are the worries that Smedley hopes are clouding the minds of Faulding shareholders because, on the terms presented yesterday, the highly conditional takeover would be a dream acquisition.
-------------------------
His spending firepower would increase to $2 billion or more and all based on using Mayne scrip, which at $6.03 a share is some 2.1 times its year low of $2.87 a share last June.
-------------------------
In his dreams, Smedley can see upside in helping his logistics business with the Faulding account to deliver drugs and consumer products like Nature's Own and Banana Boat to some 2,000 chemists.Taken a step further as he gathers doctors in Mayne-run medical centres, Smedley can see a game where the centres are pharmacies with red Mayne dots on them as he works out what to do with all that spending power he gains in the deal.
Mayne Sparks A Nervous
Reaction
Australian Financial Review 06/01/2001
The bold move by Mayne Nickless to launch a hostile takeover of FH Faulding & Co underscores its ambitions to establish a pre-eminent integrated health play in the Australian market.
----------------------
There are numerous similarities between stocking medicine on shelves and delivering to hospitals, which Faulding does, and the traditional Mayne business of logistics.Mayne argues that on this basis there is a strong strategic fit.
---------------------------
One fund manager, referring to Mayne's chief executive, Mr Peter Smedley, said: ``Smedley's is an increasingly complex and untested integrated health-care strategy, which no one really understands.``Buying Mayne means buying a bigger and bigger question mark.''
Mayne's $2bn Grab For
Faulding
Australian Financial Review 06/01/2001
Mayne Nickless has made a $2 billion hostile takeover offer for FH Faulding&Co in a bid to expand Australia's largest health-care group.The aggressive move seeks to boost Mayne's position in the private health-care market, a fast-growing sector under the Howard Government's industry reforms.
Mayne is already Australia's largest private hospital owner and plans to expand its presence in pathology, radiology and health centres.
Faulding is the oldest drug manufacturer and pharmacy wholesaler, and a successful takeover will provide Mayne with a distribution network into hospitals and chemists.
Mayne chief executive Mr Peter Smedley said the merger was a pivotal link between logistics and health care.
---------------------------
Mayne's strategic plan is to create an integrated health-care group that is capable of being replicated offshore, with the current focus on the Asian market.
-------------------------
The Adelaide-based Faulding has been mooted as a takeover candidate for several months.
--------------------
He said Faulding was a strong strategic fit in Mayne's plans to become a fully integrated health-care provider and also provided a platform for offshore expansion.``You know we have had a health and logistics company for some time, but we have never had our own health logistics. This now gives us a health logistics business,'' he said.
---------------------------
She valued Faulding's health-care and injectables businesses at $1.2 billion compared with Mayne's $900 million offer.
--------------------------
Instead, Mayne wants the lower-growth health-care division, which distributes a range of consumer products such as vitamins and first-aid treatments to the nation's pharmacy market, and the more lucrative injectable drug business, which distributes Melbourne-made drugs to local and overseas hospitals.
-----------------------
A successful scrip-based bid will result in the issue of about 317 million new Mayne shares but keep Mr Smedley's $1 billion cash war chest intact.
Mayne Bids $2b For Faulding
The Age 06/01/2001
Mayne chief executive Peter Smedley said the two-tier bid for the Adelaide-based group was about transforming Mayne's domestic hospital and diagnostics business into an integrated health-care business that it could use as a springboard for offshore expansion.
--------------------
Mr Smedley said. ``This now gives us a health logistics business. It is the pivotal link between the two platforms that we have.'' But some analysts said Mayne risked making its hospitals-diagnostics model messier by adding untried areas from Australia's biggest generic drug manufacturer.
------------------------
``It's not exactly a perfect fit and it's a leap of faith into new territory,'' said one analyst, who did not wish to be named.
--------------------------
Faulding has a strong presence in Britain and exports to 70 countries.
Far Too Cheap But Very
Clever
Sydney Morning Herald 06/01/2001
Mayne Nickless has put the weights on where they count: on the Faulding shareholders.Love him or hate him, the acquisitive Mayne Nickless boss Peter Smedley has put a $2 billion bomb under the conservative Adelaide pharmaceuticals group, FH Faulding.
This takeover is so cute and so cheeky that, if successful, Mayne will walk away with Faulding having paid not a cent in cash and will receive at least $US550 million ($1.08 billion) for selling its oral drug business. In other words, it's a takeover and a fund-raiser all tied up into one neat package.
On the face of things, this offer looks like Mayne has completely out-manoeuvred the board of Faulding. Indeed, at worst, Smedley is offering a premium of 15 per cent with not a scintilla of cash.
There are a couple of bells and whistles attached, like some capital gains tax rollover relief, but John Howard is paying for that, not Peter Smedley.
If this stingy offer is successful it delivers Mayne a whole stack of operational benefits. In a straight financial sense Mayne Nickless would get $550 million or more in cash and almost double its capital base. And the beautiful part is the bigger the capital base, the more gearing it can support.
Smedley has never been averse to a spending spree and this deal will deliver him firepower of nearly $2 billion. It's like a K-Tel offer: buy one and get one free.
-----------------------
The best Faulding can hope for is a bidding war. This might suit Mayne but only if the alternative suitor is only interested in the orals business.The only hitch for Mayne is if an alternative bidder wants any part of the business that it wants.
-------------------------
And this is precisely why another condition of this highly conditional takeover is that the offer can be withdrawn in the event of a rival takeover bid.In that instance Mayne can dump its offer and try to buy some discarded assets from a higher bidder.
-----------------------------
And given the neatness with which the Faulding assets fit with the Mayne hospital and logistics operations, you've got to assume that Smedley would be prepared to pay up a bit more.In the first instance he has a freight business that delivers things to places like corner shops at the same time Faulding is delivering drugs to the chemist next door.
----------------------
All that would be needed for the full service health care suite of assets would be the general practitioners, clearly Mayne's next target.The injectables division provides yet another distribution opportunity to hospitals and, to some degree, to increase the margins in this business by cutting out some middlemen.
$2bn Bid For Faulding Is Keyv To
Mayne's Global Ambition
Sydney Morning Herald 06/01/2001
Faulding To Reject
`opportunistic' Bid
Australian Financial Review 06/02/2001
Takeover target FH Faulding & Co is poised to reject a hostile $2 billion scrip offer from Mayne Nickless, arguing it is an opportunistic move that undervalues its assets.
-----------------------
On Friday, Mayne began selling the merits of its takeover to wary institutional investors.In what is shaping up as a game of brinkmanship, its advisers, Morgan Stanley, held discussions with fund managers on the share register, including AMP and Deustche Australia Asset Management.
---------------------------
The health-care and pharmaceutical analyst at Credit Suisse First Boston, Mr Michael Glenane, said of the bid: ``Tactically this move is brilliant, as to the strategic fit we are yet to be convinced.'' He valued the generics business at between $US527 million and $US613 million.
Smedley After Another Big
Fix
Australian Financial Review 06/02/2001
Peter Smedley obviously can't go more than a few months without a takeover hit.Barely has the rush from the takeover of Australian Hospital Care subsided than he is launching a burglary for FH Faulding. It is a demanding habit. - - - The good thing about AHC and Faulding is that Smedley's predecessor at Mayne, Bob Dalziel, knew he should have had a crack at them both and did a lot of work on them, but couldn't quite get to the wire.
---------------------
Anyway, the files were in the cabinet when Smedley moved into Dalziel's office, as was the corporate strategy he is now implementing. The man from Shell and Colonial is now the one leading the corporatisation and integration of the Australian health-care system.Faulding is important because it is, in a sense, the missing link between Mayne's two businesses, logistics and health. It transports drugs, as well as manufacturing them and selling them through chains of pharmacies.
-------------------------
But the most important benefit is that the synergies will help Smedley's financial firepower for what he really wants to do.The big problem for the re-badged Mayne Health is that it is stuck between two lots of gatekeepers it is a provider between two sets of purchasers. The doctors control the patients and the health funds control the money.
What ended up sinking Dalziel was that he was screwed by both sets of gatekeepers at the same time:
----------------------
If you don't control your supply of customers and you have no say over price, you are a taxi driver.
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Also, there are two lots of doctors to worry about, not one: the GPs who are the gatekeepers for drugs, pathology and radiology, and who also choose the specialists for the patients; and the specialists, who are the gatekeepers for the hospitals.Smedley, who has just come from revolutionising the financial services business, reckons doctors are just like independent financial planners. While you can put together networks (clinics) of them as he is starting to do the main task is to butter them up and get them onside.
-------------------
They are a prickly lot and, unlike financial planners, don't regard themselves as business people. There are plenty of stories around that specialists are revolting over the Mayne corporatisation, and see the new logo and marketing as an attempt to interfere with their control of patients and/or to turn them into business people.Smedley says that's not true, but, just in case, he is taking them to the football, inquiring after their families and grasping them earnestly by the elbow as he shakes their hands. He says he is winning them. Time will tell.
The GPs are another matter. Although they are at the bottom of the health-care food chain and very difficult to organise, they are also the key to gaining ascendancy in an integrated health system. It is true that margin pressures are forcing more of them into corporate groupings, some of which are listed companies, but most people go to a local, small GP, not a big corporate clinic, and that won't change for years.
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It is not possible to buy enough practices to dominate the GP business: as Smedley says, the model is more like independent financial planners, where you own some and persuade the rest.
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- - - there will be growing pressure to restructure the scheme to put more onus on doctors to take the risks of high drug costs.It is a set-up ready-made for change by an agent who can combine subtlety with aggression. Is that Peter Smedley?
Reluctant Faulding Lifts On
Mayne Bid
Sydney Morning Herald 06/02/2001
Shares in takeover target F.H. Faulding yesterday soared to an all-time high as investors and institutions punted on Mayne Nickless's increasing its $2 billion share-swap bid.
--------------------------
Deutsche Bank said it expected Faulding to reject the initial bid.It said the Mayne offer was an opening gambit that would bring other suitors to the table.
---------------------------
But other analysts said a counter-bid was unlikely, reducing the prospects of a better offer.Macquarie Equities said the bid had been designed to minimise the chances of a competing offer.
---------------------
The analyst said that Faulding had a messy structure which would deter other suitors, and because the company's operations as a generic drug manufacturer had little in common with Mayne's, a higher offer was highly unlikely.
-------------------------
If successful, it would expand Mayne Nickless's health-care model to include injectable pharmaceuticals, generic drugs, consumer health products and distribution services to hospitals and pharmacies.
Mayne Nickless In Axa Health
Fund Talks
Australian Financial Review 06/05/2001
Mayne Nickless is understood to have held discussions with insurance giant Axa about a potential purchase of its health fund business as it strives to consolidate its position as Australia's largest health- care company.
----------------------------
Credit Suisse First Boston said most of Faulding's assets did not fit comfortably with Mayne, and CSFB has raised the prospect that Mayne could sell the injectables unit.It was uncertain whether a purchase of Axa's health business, which trades as HBA in Victoria and Mutual Communities in South Australia, was being negotiated at the same times as the Faulding bid, but sources said that in previous discussions, Mr Smedley had said Faulding was the more favoured target.
Mr Smedley previously has been guarded about whether he wanted to buy a health fund, saying only that he ``doesn't need to''.
----------------------------
The purchase of a health fund would allow Mayne Nickless to cash in on the recent surge in the take-up of private health insurance, spurred by the introduction by the Federal Government initiatives.Private health insurance take-up has risen 46 per cent during the past 12 months.
-------------------------
Mayne Nickless shares fell 10cents to $6.23 yesterday as analysts raised concerns about Mr Smedley's growth strategy.
--------------------------
``We believe the risks associated with the unproven Mayne/Faulding vertical health model outweigh the recovering domestic hospital and cost cutting story,'' Salomon Smith Barney said.
AXA says has had no talks with
Mayne on health unit
AAP News 06/05/2001
"We have had no discussions with Mayne Nickless on selling our health business," Mr Owen told reporters.
Mayne In Bid For Hospital
Supplier
Australian Financial Review 06/07/2001
Mayne Nickless is expected to lodge a bid for the country's biggest wholesale distributor to hospitals next week, complementing its $2 billion bid for FH Faulding.Hospital Supplies of Australia, the trading arm of the Victorian Healthcare Association, has been put on the market with Maynes and FH Faulding understood to have expressed preliminary interest.
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- - HSA supplies pharmaceutical, surgical and general products to a national network of hospitals.
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While Mr Smedley looks to grow his health-care operations, his logistics business is coming under pressure. It is expected that it will reveal this week that it has lost the majority of its cash logistics contracts with the three major banks, one of the biggest sources of revenue for its Armaguard unit.
Why Mayne Wants To Give
Pharmacists A Big Red Dot
Australian Financial Review 06/08/2001
Mayne Nickless is hoping to make its mark in the pharmacy industry through its expertise in distribution.If there is a strategy behind Mayne Nickless's $2.1 billion bid for FH Faulding & Co it is all about putting the red dot of its new branding on chemists.
Faulding, which by law is not allowed to own chemists, has come to dominate the country's pharmacy distribution industry through the establishment of strong relationships with chemists that involves the rebranding of shops under the Chemmart and Terry White banner.
--------------------------
Mayne Nickless wants to establish itself as the country's only integrated health care provider, which by virtue of its complex bid for Faulding apparently includes the supply of suncream to the nation's pharmacy network.The quickest way to do that is to buy Faulding's unloved distribution business and coax its partnered chemists to kneel before the big red dot, Mayne's universal brand.
-----------------------------
``We were already struggling to see how the hospitals, diagnostic and GPs could come together in a harmonious model,'' he said in a report to clients.``Now pharmaceutical distribution, manufacture of drugs and consumer products are being added.''
He said that like the Colonial allfinanz model pursued by Peter Smedley, Mayne has all the hallmarks of another M&A frenzy although in the case of Mayne there is no CBA in the wings to take it out through a takeover before the full benefits or potential problems materialise.
-----------------------
Another potential problem is the reaction to Mayne's aggressive vertically integrated model. Industry sources say the Smedley regime has already ruffled some feathers, one instance of which is friction between management and doctors at its St George private hospital in Sydney.But if this daring move is successful, Mayne will end up with $4.7 billion in assets and $500 million in cash a war-chest with which Smedley can march north into Asia, carrying a red-dot flag.
Smedley's Faulding Play Has Its
Headaches
Australian Financial Review 06/09/2001
There's usually much more than meets the eye in a Peter Smedley takeover bid. And Mayne Nickless's audacious $1.9 billion takeover bid for the drug manufacturer and distributor F.H. Faulding & Co Ltd is no exception.
----------------------------The funds for this takeover are coming, essentially, from two sources: the shareholders of F.H. Faulding and the Australian taxpayer. By offering a scrip-only bid, Mayne CEO Smedley is essentially asking Faulding shareholders to buy new scrip in Mayne Nickless to finance his acquisition of the businesses operated by Faulding. The taxpayer gets involved because federal tax dollars (directly and indirectly) would underwrite 80-90cents in the dollar of the revenues of the new Mayne-Faulding entity.
------------------
Smedley may have dreamed up this takeover, but make no mistake: you, the taxpayer, would pay for it in the end.The funding structure of the Faulding bid means that Mayne Nickless shareholders are taking on an almost negligible level of risk to buy Faulding.
-----------------------
Smedley's low-risk bid is clever, but not everyone is applauding. Around the investment markets, a number of local analysts and fund managers question whether the vertically integrated health services company model will work in Australia.The doubters are justified in raising questions. The closest model - but with major differences - to the kind of company Smedley is trying to construct is what is dubbed a health management organisation (HMO) in the United States.
HMOs are essentially health insurance companies that control every element of the health value chain by entering into contracts with health service suppliers - doctors, pharmacists, pathologists, radiologists and hospitals - to provide a "closed shop" medical service to members.
HMOs are big in the US because corporate health funds have been attempting -mostly unsuccessfully - to control the exploding cost of providing medical insurance to employees. HMOs are also highly controversial, with consumer rights groups and class action lawyers leading the charge against them. US courts are full of HMO-related claims; the consumers typically alleging they were denied appropriate care because of arbitrary cost-saving rules imposed on doctors.
------------------------
But once Mayne owns a private health fund (and most in the industry now regard this as inevitable) Smedley will have essentially built a giant HMO that owns most of its service providers.
-------------------
Where Smedley is at risk is that a large part of his health division's revenues come from private hospitals, which in turn depend heavily on referrals from private health funds.
Smedley Misses Mayne Chance
Australian Financial Review 06/18/2001
A widely held view that Mayne Nickless was to lodge its formal takeover documents with its $2.2 billion target, FH Faulding & Co, on Friday afternoon failed to be met. - - - the market at least continues to press home the fact that it views the present all-scrip bid as below par.
Expansion Is The Mayne Game
Business Review Weekly 06/29/2001
THE faulding bid is only part of peter smedley's ambition to take Mayne Nickless deeper into the health-care market
----------------
A hostile bid pitched at a bargain-basement level with no cash alternative - one that would inevitably lead to substantial job losses -was not likely to be well received in Faulding's Adelaide boardroom.On June 13, a carefully worded statement was issued, saying the bid was unwanted,
---------------------------
But Mayne's chief executive, Peter Smedley, is a canny and combative opponent. Faulding has been in his sights for months. ---------------------
Given Mayne's low gearing level (14.6% at December 31), the acquisition of Faulding on or close to the original terms of the bid would provide Smedley with a large fighting fund to spend on another local or foreign acquisition. The $1 billion that would be gained from the sale of the generic drugs business would wipe out consolidated Faulding/Mayne debt and, if the enlarged company were to gear up to management's target range of 35-40%, it would have up to $1.7 billion to spend.
-----------------------
In the long term, a critical issue is going to be keeping the medical staff onside. Quality health care depends on having quality staff, but among some Mayne doctors there is resentment towards the hard-numbers men in the new management team, and their effect on the delivery of health care. How this will be dealt with is one of the big questions - not just for Mayne but for the entire industry.Health is a business in which there is considerable potential for leverage: GPs write most of the referrals for radiology and pathology and are highly influential in a patient's choice of hospital. A group of 20 GPs will generate, on average, $7 million in Medicare payments alone for medical specialists, plus many millions more in gap payments, hospital care, pharmaceutical, and allied treatments (such as physiotherapy). According to some surveys, total downstream health-related expenditure per 20 GPs is as much as $50 million a year.
--------------------------
Pharmacies offer potential because more than 90% of people who visit their doctor come out with a prescription to be filled. Pharmaceutical supplies, from bandages to drugs, are used in hospitals as well as stocked in suburban pharmacies. Since pharmacies and hospitals take frequent deliveries, health logistics would provide a link between the two sides of the business.
------------------------
Toll Holdings is the biggest supplier of distribution services for Faulding, and an obvious outcome of the takeover would be for Mayne Logistics to take over that role. Another potential benefit is branding.
---------------------------
At this stage, and based on Smedley's record, the money is on Mayne ending up with the parts of Faulding that it wants.
Smedley Adds Dollop Of
Sweetener
Australian Financial Review 07/09/2001
An alternative to the two-tiered all-scrip bid is close, with this option including a $7 to $8 cash component to sweeten the deal for institutions.
--------------------------
Having rejected the Mayne bid as skinny, fund managers should accept the alternative, which will offset the dilution of an all-scrip bid. If the deal collapses, Faulding shares will be back under $10.
Mayne Nick/FH Faulding in
trading halt, new bid rumoured
AAP News 07/09/2001
Health care group Mayne Nickless is on the verge of sweetening its $2 billion bid for Adelaide-based FH Faulding & Co amid ongoing dissention from institutional shareholders.
----------------------
However, Mr Smedley is expected to unveil a revised bid for Faulding within days which values the company's shares at more than $13.00, including up to $8.00 per share in cash.
------------------------------
"It is definitely not fairly valued where it is at and that is really the biggest obstacle standing in the way of a deal," Deutsche Bank analyst Kiara Bechta-Metti said.
End Near In Battle For
Faulding
Australian Financial Review 07/10/2001
An end to the takeover battle for FH Faulding & Co is in sight, with Mayne Nickless having reached a friendly agreement with the Adelaide-based health care group.Under the deal, Mayne Nickless will increase its offer to more than $14 a share, including a substantial cash component, and Faulding's United States assets will be sold to a locked-in buyer thought to be Israeli group Teva.
--------------------
The agreement will value Faulding at more than $2.3 billion, compared with the original all scrip two-tiered bid from Mayne, launched six weeks ago, which put a value of $2 billion on the group.
-----------------------
* Mayne's strategic plan is to create an integrated health-care group that is capable of being replicated offshore, with the current focus on the the Asian market.
Faulding Takeover Seen As
Likely
Australian Financial Review 07/11/2001
The US pharmaceutical group Alpharma is expected to take part in a three-way breakup of Adelaide-based health care group FH Faulding & Co, spearheaded by Mayne Nickless boss Mr Peter Smedley.Under the $2.4 billion plan, 156-year-old Faulding will be broken in three. Alpharma is to buy the US generics business and Israeli group Teva to get the hospital injectables business.
Mayne will keep the domestic distribution operations which will fit in with its extensive network of private hospitals and its traditional logistics business.
------------------------
The distribution business, which Mayne is targeting, is essentially a logistics endeavour that involves trucks stocking the shelves of pharmacies and hospitals.
------------------------------
An announcement is expected today. The deal would end a long-running drama which has been largely played out behind the scenes.
Mayne Nickless ups offer for
Faulding, adds _3Sydney
AAP News 07/12/2001
Mayne Nickless chief executive Peter Smedley said the new offer is recommended by the Faulding board as it was satisifed that the increased offer was fair and in their shareholders interest.The Faulding board has agreed not to solicit any other offers for Faulding or allow any other party to conduct due diligence.
Mayne says won't look at aged
care nursing homes
AAP News 07/12/2001
Mayne Nickless Ltd chief executive Peter Smedley today said the company was not looking at adding aged care nursing homes to its healthcare division.
----------------------
Mr Smedley said that within its hospital network, Mayne was working with doctors to establish day care facilities for their lower acuity patients.
Mayne's Smedley sees Aust
brownfields hospital opportunities
AAP News 07/12/2001
Mayne Nickless Ltd chief executive Peter Smedley said the company saw opportunities for moving into brownfield development of its Australian hospital sites.
---------------------------
Mr Smedley also repeated that there remained only a few opportunities to make acquisitions in Asia, but he said the company could look at focusing on greenfield development there.
Job losses at Faulding's
Adelaide head office, says Mayne
AAP News 07/12/2001
Mayne's group managing director and chief executive officer, Peter Smedley, said today jobs would be lost at Faulding's Adelaide head office.
-----------------------
The offer was met with concern by the South Australian Opposition, which said it would result in the state losing skilled jobs.
WRAP - Faulding approves new
$2.46 bln Mayne bid,
AAP News 07/12/2001
Mayne Nickless Ltd has won over F.H. Faulding & Co Ltd with a revised $2.46 billion takeover bid and a plan to carve up the drug maker's businesses.
------------------------------
"I think it represents a fair deal for both sides," he said, adding another party was unlikely to launch a rival offer.
-------------------------
Macquarie Equities analyst John O'Connell agreed Mayne did well out of the deal.
-------------------
Renowned for his deal-making, Mr Smedley said: "This healthcare business is integral to bringing together Mayne's two core business streams, healthcare and logisitics."
--------------------------
"What this does is give a us ... position which means that we can confidently launch out of Australia, certainly as a regional player."
Smart Outcomes In The Takeovers
Game
Australian Financial Review 07/13/2001
The strategic focuses behind yesterday's two agreed takeovers, which totalled about $5.5 billion, are miles apart, with Mayne completing a potentially sensational capital raising, opening an array of alternative new moves, and -- - - - - .Peter Smedley picks up some extra business for his express delivery business and logistics arm but the benefits of the Faulding deal centre on the capital raising.
---------------------
- - - - - the real impact of the deal is a massive capital raising.
-------------------------
How long Smedley retains Faulding's consumer products division remains to be seen. Vitamins, anti-depressants and Banana Boat sun cream may be used by his hospital patients and recommended by his general practitioner network, but they are hardly synergistic assets.
Mayne's Size Allows For Asian
Expansion
Australian Financial Review 07/13/2001
Mayne Nickless chief, Mr Peter Smedley, has secured the critical mass for his planned launch of the group into Asia after yesterday winning support for a $2.5 billion break-up of FH Faulding & Co.
-------------------------
Mayne may expand a number of its more profitable hospitals in Australia as well as duplicating its low cost integrated health service established in Indonesia across South-East Asian countries.
--------------------------
Under the three-way offer unveiled yesterday, Mayne is to sell the US Purepac business to Alpharma for $US660 million ($1.31 billion) and the injectable business to Teva Pharmaceuticals for $US365 million.
--------------------------------
``Mayne Nickless has pulled off a very clever series of Faulding deals,'' SalomonSmithBarney told clients. ``The difficult call is on the premium to add for the $2 billion-plus balance sheet firepower.''
------------------------------
Maintaining the size of the distribution network is critical to the success of the transaction.Mayne Nickless chief operating officer, Mr Stuart James, met the national president of the Pharmacist Guild of Australia, Mr John Bronger, in Sydney yesterday.
----------------------
``We'll continue to do what we can, but ultimately a State government can't stop a company ... moving a headquarters, if they choose to, to another State,'' the South Australian Treasurer, Mr Rob Lucas, said.
Faulding Board Settles For
Mayne
The Age 07/13/2001
Mayne chief executive Peter Smedley confidently predicted this would leave the company with the financial firepower for even further expansion next year.
------------------------
If the plan works, Mayne Nickless would be left with a new business priced at $850 million, with $2billion turnover and $78million earnings before interest and tax.
-------------------------
Mr Smedley, whose thirst for acquisitions has earned him the nickname ``Pacman'', said yesterday the purchase was a springboard for more growth in Asia and potentially in other markets.
----------------------------
``Think of it inside an integrated organisation such as Mayne whereby we have for the first time the core integration of logistics and health care ... through the Fauldings acquisition.''
Mayne shares seen continuing
upward momentum - analysts
AAP News 07/13/2001
Shares in healthcare and logistics group Mayne Nickless Ltd are expected to continue to improve in the short-term, following its friendly $2.46 billion takeover play for FH Faulding & Co Ltd.
-------------------------
A strong share price will make Mayne's all scrip offer Faulding more attractive. Shareholders also have a choice of an all cash offer or a combination of cash and scrip.
----------------------------
He also anticipated unquantified synergis from cutting duplication at the corporate level, and from rationalising warehouse and transport operations, as well as information systems.
-----------------------------
"Effectively what he did through this deal is done a capital raising, it gives him the balance sheet capability to go on and fund further acquisition growth and keep the further earnings momentum story going," he said.
Hostilities Over As Faulding
Accepts Higher Mayne Bid
Sydney Morning Herald 07/13/2001
``Don't look at the Faulding's acquisitions of healthcare for what you see now,'' Mr Smedley said. ``Think of it inside an integrated organisation such as Mayne whereby we have for the first time the core integration of logistics and healthcare ... through the Faulding acquisition.''
Rationalisation Is Logical
Outcome For Mayne
Australian Financial Review 07/14/2001
Mayne Nickless is likely to come under increasing pressure to rationalise its 130-year-old logistics operations after securing FH Faulding & Co's support during the week for a $2.5billion break-up of the group.It is understood Mayne Logistics is set to lose a $25 million contract with a major Australian food company, adding to the list of high- profile contracts the business has lost in recent months.
----------------------
While Mr Smedley on Thursday labelled the logistics arm as a core business, logistics is returning by far the lowest margins at about 4.5 per cent.
Mayne to consider SA firms.
The Advertiser 07/14/2001
Abstract:--- Australasian Business Intelligence:
Mayne Nickless could be considering expanding its health care base to include South Australia. The chief executive of the diversified company, Peter Smedley, said on 13 July 2001 there was lots of opportunity to expand its operations into South Australia.
XCHANGE -- Unstoppable
Smedley
Sydney Morning Herald 07/14/2001
The merchant banks are already working on a hit list of potential targets which they think Mayne CEO Peter ``Pacman'' Smedley will be unable to resist having a long hard look at.
---------------------
Credit Suisse First Boston believes Mayne could take a stab at Medibank Private,
-----------------------
AXA Health Insurance, valued by CSFB at $390 million, is the closest listed alternative to Medibank Private. In Asia, Mayne could run the ruler over Parkway,
Mayne to look at another
acquisition in 12 months - Smedley
AAP News 07/15/2001
Mayne Nickless Ltd chief executive Peter Smedley said today he would probably hit the acquisition trail again in about 12 months after he had "bedded down" the $2.5 billion FH Faulding & Co Ltd takeover.
----------------------
"The first part of my timetable is to make sure that we bed down this acquisition - - - - -"I believe the investors will give us at least 12 months to do that and then to make plans for further growth."
----------------------------
Mr Smedley said Mayne had looked at a number of areas for potential health and logistics integrated businesses but ruled out owning its own health insurance fund."We don't need to own a health fund in order to have an integrated health model," Mr Smedley said.
Mayne Has Eyes Set On Asia
Australian Financial Review 07/16/2001
Mayne Nickless chief executive Mr Peter Smedley said yesterday the once-struggling health care giant would seek more acquisitions as soon as it had bedded down the $2.5 billion takeover of FHFaulding Ltd.
-----------------------------
However, Asia was a fragmented market and Mayne did not see any big acquisition targets on the horizon.Mr Smedley said the company would probably grow there through ``greenfields'' operations or incrementally on a localised basis.
More day surgeries - Mayne.
The Australian 07/16/2001
Abstract:--- Australasian Business Intelligence:
Mayne Nickless is expected to invest heavily in new low-acuity facilities in Australia. On 15 July 2001, Peter Smedley, CEO of Mayne Nickless, said the company would establish the medical centres, which are able to cater to patients requiring straight forward, less specialised treatment. There was a gap in the medical treatment market for these types of day surgery centres,
"Pacman" to be on prowl
again.
The Courier-mail 07/16/2001
Abstract:- - Australasian Business Intelligence:
Smedley said his Australian hospital and logistics group would spend funds from now until mid-2002 on "bedding down"- - . - - - - Smedley says Mayne will focus on greenfield development in Asia.
Smedley The Shareholders'
Hero
Australian Financial Review 07/18/2001
This week marks Peter Smedley's profitable first year at the helm of Mayne Nickless in which company shareholders have seen their stock value increase by a factor of 2.2 times and the man himself is sitting on a paper profit of $7.2 million.
--------------------------
If he understands nothing else, Smedley certainly knows how to deliver momentum to the market, which feeds on the moves.Critics say it's management on the run designed to maximise short-term growth with aggressive accounting policies. This group is watching closely to see if, as rumoured, the Commonwealth Bank does take a big writedown on the Asian insurance arm it acquired during last year's Colonial takeover.
----------------------------
Mayne's stock price rise is also not entirely due to magic. Smedley has cut costs, created momentum in the company through such changes as company-wide rather than individual hospital negotiations with health funds, and created new brand awareness.The buzz word is ``health logistics'', with Faulding representing another distribution channel to bring health products to the market and just as ``allfinanz'' was the Colonial theme, this will be the ``glue'' through which all future acquisitions will be sold.
---------------------------
The sceptics may say Smedley will, via acquisitions, window-dress his way to huge shareholder gains in the next two years before he exits, leaving his replacement with a disaster.
SA Oppn leader Rann to meet
Mayne boss on Faulding
AAP News 07/21/2001
Mr Rann said he wanted to ensure Mr Smedley and the Mayne management understood the importance of keeping jobs and Faulding's corporate headquarters in Adelaide.
Mystery Player Enters Faulding
Drama
Australian Financial Review 07/30/2001
Sources confirmed that investment banking representatives of a United States-listed group had contacted Faulding about the possibility of making a competing bid for the Adelaide-based group.
Ian Huntley And/or Associates
Hold No Interests In Mayne Nickless
Shares Magazine 08/01/2001
In a few months the price of Mayne moved above $6. That made Smedley a $1.3 billion man, to credit him with the added market capitalisation.It was known before his entry that the Government's encouragement to private health insurance would boost the private health industry where Mayne is Australia's largest operator.
---------------------
He made a host of points along these commonsense lines, which were further articulated with the later release of a strategic business plan.
------------------
"Given those very good positions, it is more reasonable to ask why the group's financial performance is not stronger," he said.
AMP Backs Smedley's Plans For
Mayne
Australian Financial Review 08/03/2001
AMP this week became a substantial shareholder in the health-care and logistics giant, Mayne Nickless, drawn in by the aggressive expansionary strategy instituted by its chief executive, Mr Peter Smedley.
----------------------
Analysts believe that a further re-rating of the stock is likely if the company can demonstrate a sustained profit recovery going into the 2002 financial year.
Mayne Lights Up Parkway
Stock
Australian Financial Review 08/27/2001
Shares in Singaporean private hospital operator Parkway Holdings surged on Friday on talk that Mayne Nickless was to pick up a 16.7 per cent stake from willing seller CapitaLand.With the Faulding bid all but assured, to many it seems only a question of when, not if, Peter Smedley will turn his sights to the underperforming Parkway and work his magic.
------------------------
A fortnight ago, Parkway divested its sore thumb of London Heart Hospital for GBP29.5 million ($79.6 million), making it a more appetising bite for Smedley. This has underpinned the latest talk.Key assets of Parkway in Singapore are the 380-bed Gleneagles Hospital, the 157-bed East Shore Hospital, and the 505-bed Mount Elizabeth Hospital.
WRAP-Health care unit seen
backing Mayne's 39 pct yr profit jump
AAP News 08/27/2001
The Peter Smedley-led healthcare and logistics group Mayne Nickless should post a 39 per cent jump in full year earnings to about $105 million on Wednesday, backed by the company's revitalised healthcare division.
------------------------
He said as Australia's largest hospital operator Mayne Nickless was well positioned to take advantage of the upturn in the private health care sector."Plus the new management policy has really run the hospitals hard," he said.
Mayne says well positioned for
both organic and acquired growth
AAP News 08/29/2001
Mayne Nickless today reported a full year net profit of $161.562 million for the year to June 30, 2001, compared to last year's net loss of $174.079 million.
Mayne sees room for greenfield
growth in healthcare in Asia
AAP News 08/29/2001
Mayne Nickless Ltd chief executive Peter Smedley today said that there was greenfield growth in healthcare for the company in Asia.Mr Smedley said he would like to roll out the company's Indonesian model into Asia where there was an increasing demand for private health services.
"We have a very clear model in Asia and it's greenfield growth in healthcare.
----------------
Mr Smedley also said that the logistics side of the group would come under pressure over the next 12 months.
Mayne business booms as more
Australians go to hospital
AAP News 08/29/2001
Healthcare and logistics company Mayne Nickless Ltd staged a stunning $335 million turnaround in 2000/01, partly fuelled by a federal government-inspired increase in hospital admissions.
-------------------------
The federal government's health insurance initiatives helped boost admissions at Mayne's 61 hospitals by 22 per cent to 501,000 during the year.
------------------------
During the year revenue from Mayne's healthcare division increased by 25.6 per cent to $1.55 billion while logistics revenue was up 9.6 per cent to 1.273 billion.
-----------------------------
"Mayne's business model ensures it is well placed for organic growth and allows us to readily integrate acquisitions," he said.
Private Hospital Turnaround
Yields Healthy Profits
Australian Financial Review 08/30/2001
Strong profit performances from the health-care sector have captured investor attention in an otherwise disappointing profit season, with focus shifting to a massive earnings rebound in private hospital operators.The recovery has been driven by Federal Government incentives to encourage private health cover and has coincided with widespread industry structural changes and the sector's defensive tilt in an uncertain global economy.
------------------------------
``The for-profit hospital sector has aggressively embraced the turn-around in private health insurance participation rates and appears well positioned to deliver strong revenue and earnings growth over the medium term,'' the report said.
------------------------
The chief executive officer, Mr Peter Smedley, said: ``We are seeing sustainable improvements in the performance of our hospitals' business arising from internal efficiency initiatives.''
Smedley Wets The Baby's Head
Australian Financial Review 08/30/2001
Health care and logistics provider Mayne Nickless has declared itself a reinvented company able to accommodate acquisitions of up to $2.5 billion, despite doubts about its trading outlook and diverse business model.
-------------------------
In the past 12 months, Mayne shares have risen almost 60 per cent but have been left in the wake of smaller operators Ramsay Healthcare and Healthscope, which have each risen more than 200 per cent.
Political Change `not Troubling'
Mayne
Australian Financial Review 08/30/2001
Despite its businesses being highly vulnerable to changes in government policies, Mayne Nickless is not troubled by an uncertain political environment, its chief executive says.
Corporate Surgery Pays Off For
Mayne
The Age 08/30/2001
Mayne's shareholders have
emerged from financal drought
AAP News 08/30/2001
Mr Smedley said Mayne's far-reaching portfolio restructure, reduced cost base and rebranding exercise were now delivering value for shareholders.
---------------------
Mr Smedley also flagged the creation of a new healthcare logistics unit if Mayne's current $2.46 billion offer for pharmaceutical company FH Faulding & Co was successful.
Smedley's Doctoring Brings Mayne
Back To Good Health
Sydney Morning Herald 08/30/2001
Mr Peter Smedley's corporate surgery at Mayne Nickless has already started to heal the group's operating earnings, with profit recovering strongly in the June 30 second half.
Mayne Nickless Feels Better
Newcastle Herald 08/30/2001
F.H. Faulding & Co. Limited
(FHF.AX) Offer free from all conditions other than acceptances of
90%.
Australian Stock Exchange Company Announcements
08/30/2001
We Tell More Than Others: Mayne
Boss
Australian Financial Review 08/31/2001
Mayne Nickless chief executive Mr Peter Smedley has defended the company's reporting practices in the wake of Thursday's annual profit release which was clouded by restructuring provisions.He said the company disclosed a more comprehensive level of financial data to the market than many other corporates and had an effective investor relations program.
Market Uncertainty Over Mayne
Nickless
Australian Financial Review 08/31/2001
There are, of course, the usual concerns over transparency highlighted this time by the fall in net operating cash flows from $173.5 million in 2000 to $84.9 million in 2001 at a time when earnings grew dramatically.
----------------------
The last increase is important because it highlights the fact that while Smedley has achieved undoubted efficiencies, shown by lower patient stays in hospital and increased productivity in his pathology and imaging units, he is not pouring huge amounts of money into upgrading the hospitals.
---------------------------
Two months ago, Smedley signed a nationwide deal with Medibank Private detailing how the insurance company will pay the hospital group for the full range of services.
----------------------
Centralised services is a key plank in Smedley's armour, and the head of Medibank Private, Mark Burrowes, just happens to be a former Shell and Colonial colleague of Smedley's.
-------------------
Much is written about Smedley's grand health strategy, but in essence it is simply an attack at the market from every possible angle.Faulding introduces healthy people into the fold through Faulding chemists, and through his new logo Smedley increases direct communications with the market.
He has only added three general practitioner medical centres to the four long held by the company, and in total Smedley has just 40 doctors on his payroll.
---------------------
Doctors can't push patients to a corporate hospital, but if it is convenient, it makes sense to do so, and the game is to buy a medical centre for about eight times earnings and drive returns higher by boosting pathology and hospital throughput.
---------------------------
All this improves the operating business, but Mayne's big gains will come through its acquisition strategy. It is, as the House of Were argues, a capital allocation play and the bet is on how Smedley will spend the company's money.
Mayne Eyes Europe
The Age 08/31/2001
Mayne Nickless is likely to make any future large acquisitions in Europe as it spends its takeover budget of up to $2.5 billion in the next year or two.Managing director Peter Smedley said yesterday he would not be restricted by Mayne's generally sorry history in the European logistics industry.
----------------------------
He said Asia was a natural market for Mayne, as operations there would be able to grow on the back of Mayne's existing Australian infrastructure.Insistence on a greenfield approach in Asia rules out the much-speculated bid for listed Singapore hospital operator Parkway.
--------------------------
``That (sale) does not rule out going back into Europe, where you are looking at defined assets which will give us a clear market position in that country. I'm not ruling out any part of the globe where we can sensibly add shareholder value.''
Smedley's gain without pain
lifts Mayne.
The Australian 08/31/2001
Abstract:-- - Australasian Business Intelligence:
The first task of Mayne Nickless's CEO, Peter Smedley, upon joining the company was to appoint a specialist team. In mid-2000 Smedley, his operations manager, Stuart James, and chief financial officer, Peter Jenkins, appointed 14 hand-picked, non-divisional heads to reorganise the corporation so that it would make increased gross earnings of $A100m. A business plan was prepared in six weeks and the team returned to normal activities. Subsequently, divisional heads were replaced with the specialist team members. The corporate re-organisation was achieved in three months. This delivered the improved financial results recorded for fiscal 2001. This plan was a variation of the corporate restructure performed by Smedley, Jenkins and James at Colonial, before the Commonwealth Bank of Australia's $A9bn takeover.
Hospitals Bed Down Better
Margins
Shares Magazine 09/01/2001
There was no other sector of the market that performed as healthily last financial year as the private hospital operators. And just about all influences on sentiment suggest continued strength. The private hospital industry generates more than $3 billion per annum in income but the sharemarket now provides only three listed routes of exposure to what is one of few sectors that is seen to be largely immune to general macroeconomic downturn.
-------------------
- - - - - although hospitals were the place to invest during the year to June this year, they were dramatic underperformers in the previous two fiscal years.
----------------------------
As the operating environment improves, a corporatisation force of almost equal potency is driving up hospital valuations. The private industry is highly fragmented and the amalgamation benefits are significant and enduring.
-------------------------
The figures are distorted by the role of churches and other organisations in running non-for-profit facilities. Nonetheless, there remains a huge reserve of takeover/rationalisation targets.One of the main benefits is the opportunity for improved negotiating power with the health funds.
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Amalgamation also brings economies of scale in procurement and inventory management and access to better budgets for the installation of better information technology.
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Corporatisation also offers improved human resources in recruitment, training and rostering, co-ordinated marketing and business development and more efficient facilities management.The operating configuration of a typical hospital also delivers high earnings sensitivity to changes in occupancy and average revenues per patient day. As the Revenue Leverage table shows on page 43, a 5 per cent increase in occupancy, coupled with a 5 per cent rise in average revenue per patient day can equate to an earnings gain of almost 50 per cent as a hospital emerges from a low margin operating phase.
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Mayne NicklessThe market leader has already become the centre of attention as CEO, Peter Smedley, executes a corporate vision of vertical and horizontal integration and addresses a number of inherent inefficiencies in the supply and management chains within the hospital and associated medical diagnostic industries.
--------------------
The deal lifted Mayne's market shares in Victoria, Queensland and Tasmania to those it enjoys in NSW and it is now in a position to leverage its efficiency and negotiating strengths across that dominant network.Mayne has spent some time trimming the upper and mid management layers on both sides of its business as it moves to a centralised operating model. It has also sought to discontinue lower margin areas of operation. In some cases, that has stretched relationships with some of the practicing doctors and specialists and staff but it is showing up in better profit margins.
----------------------
It is therefore by far and away the largest integrated player in Australian health.
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At the moment, Mayne's only offshore hospitals are in Indonesia (almost 600 beds) and Fiji (45 beds) but that is likely to change as the growth strategy becomes more valorous.The group has certainly been valiant in building its brand, with a high profile TV campaign offering the image of a tech-intensive health provider. In the December 2000 half, the group took a $12 million charge against brand creation.
Mayne Nickless Limited (MAY.AX)
Letter to FHF Shareholders.
Australian Stock Exchange Company Announcements
09/02/2001
Mayne Nickless Limited ('Mayne') today announced that it has now satisfied or waived all conditions relating to its offer for FH Faulding & Co Limited ('Faulding'), other than achieving acceptances of 90 per cent of shares and options.
Ambo fee shift leaves patients
out of pocket.
The Mercury 09/03/2001
Abstract:-- - Australasian Business Intelligence:
The operator of Hobart Private Hospital and St Helens Hospital, Mayne Health, has informed patients it will not pay for ambulance transport home after they are discharged. The new policy includes elderly patients returning to nursing homes.
Mayne extends offer to Faulding
shareholders by one week
AAP News 09/06/2001
Faulding cleared to tap $2 bln
US anti-ulcer drug market
AAP News 09/17/2001
Takeover target FH Faulding & Co Ltd has received final US drug regulator approval to produce and market a tablet version of its anti-ulcer treatment.
Bosses' pay-offs a $5.8m Mayne
pain.
The Australian 09/19/2001
Abstract:-- - Australasian Business Intelligence:
In fiscal 2001 Mayne Nickless Limited provided $A5.8m in retirement or departure pay-outs to executives. - - - - Smedley purchased two million Mayne Nickless shares when he took the job, using an interest-free loan of $A5.8m from the logistics and health care company.
Mayne makes third, but final,
extension to Faulding offer
AAP News 09/20/2001
Health Funds Are In Recovery
Business Review Weekly 09/20/2001
The Government's Lifetime Health Cover scheme has been good for health insurance funds. Just how good will become apparent over the next two months, as Australia's 44 health insurers release their results for the 2000-01 financial year. It is a sure bet that they had a wonderful year.
-----------------------
The chief executive of the industry group, the Australian Health Insurance Association, Russell Schneider, says: "Without doubt, the surplus reported this year will be the highest in quite a few years, and in terms of dollar figures, the highest the industry has ever shown in Australia."The biggest single reason for the booming financial times is the Lifetime Health Cover scheme. Introduced on July 1 last year, it was the third initiative of the Howard Government since 1999 to boost the fortunes of health insurers.
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At the same time, the waiting periods and various other restrictions imposed on the new members have meant that claims and benefit payouts have been relatively low.
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The relationship between the hospitals and the insurers has never been an easy one, - - - - "The relationship is a lot better now. The hospitals were feeling unacceptably squeezed in their profits for a while but the vast expansion of the market has put insurers and hospitals in a better position."A new element in the latest round of negotiations has been the enlarged Mayne Nickless group, - - - Neither insurers nor hospital companies reveal the details of negotiations over funding, but the funds say that most of the contracts signed recently have allowed for substantial increases in payments to the hospitals, typically 5-8%. Some insurers report that the hospitals had been asking for as much as a 20% increase in payments as a starting point in negotiations.
-----------------
Until 1999, Medibank Private was not leveraging its market size in hospital negotiations and was paying too much. Since then, we have pulled the rates back and I would be disappointed if we were not using our size effectively."- - - - - - - Although the rebate has been popular with many voters, it has also been widely criticised by economists, unions and supporters of public hospitals.
Mayne Extends Bid Deadline Again
Sydney Morning Herald 09/21/2001
Terrorist attacks, collapsing airlines, the prospect of war and a refugee crisis appear to have pushed approval of the Mayne Nickless bid for FH Faulding off the agenda for retail shareholders.
-----------------------
Yesterday Mayne Nickless and FH Faulding, regarded as defensive stocks in such times of sharemarket volatility, hit record highs. Mayne jumped to $7.37 before finishing down 4c on the day at $6.88. Faulding hit $16.60 before closing at $15.62.
Bid For Faulding Looks A Bit
Iffy
Sydney Morning Herald 09/28/2001
Mayne Nickless's $2.5 billion break-up bid for FH Faulding is on a knife-edge, with the health logistics group still needing 4 per cent of Faulding shareholders to accept the deal before the close of business on Tuesday.
--------------------------
Both Mayne and Faulding have embarked on an intensive advertising campaign in a combined effort to urge shareholders to accept the bid .
Three extensions and a sweetener
deliver Faulding to Mayne
AAP News 09/29/2001
After almost six months, three deadline extensions and one sweetener, Mayne Nickless finally claimed victory in its $2.5 billion takeover offer for Adelaide's FH Faulding & Co Ltd.
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With the offer suffering from a sluggish acceptance rate, there was a real risk the bid could have fallen over if the 90 per cent mark was not reached by the close of business on Tuesday.
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He said the merged entity would create Australia's premier health care and logistics services company, which provides pharmaceutical manufacturing and distribution."We will now form a much stronger and more diverse organisation with the expertise, the infrastructure and the strategic flexibility...for further growth both at home and abroad."
Mayne Deal Done
Illawarra Mercury 09/29/2001
``Particularly as it ends a period of uncertainty for all the stakeholders of Faulding's business, including employees, pharmacists and other business partners, and shareholders,'' he said.
Mayne Nickless looks to Asia as
Faulding deal is mopped up
AAP News 10/03/2001
Healthcare and logistics group Mayne Nickless is most likely to turn to South East Asia for further growth options after completing its prize F H Faulding & Co acquisition, an analyst said today.
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Singapore-listed hospital operator Parkway Group Healthcare could be the next target in the sights of Mayne chief executive Peter Smedley."Parkway have got a pretty good grip on the Singapore (healthcare) market, they dominate Malaysia and they have got some assets in Indonesia," Mr Goodsall said.
"In some of those markets we think it would be difficult to go building greenfield sites."
He said this would give Mayne Nickless a reasonable footprint in Asia,
-----------------------
"That is to get growth through acquisition and bring synergies by building bigger organisations and leveraging expertise," he said.
--------------------------
Mr Smedley and his top executives Peter Jenkins, Stuart James and Peter Hourihan had been appointed to the Faulding board.
Mayne War Chest Still
Well-stocked
Sydney Morning Herald 10/03/2001
With its latest acquisition out of the way, who's next? - - - - - -Few believe the Pacman will sit idle with an estimated $2.5 billion sitting in the Mayne Nickless war chest. - - -Some expect the move to be sooner rather than later. - - - the general view is that health care assets will remain the main focus.
If it is another health care acquisition, the spotlight favours three potential targets: the rather pricey Parkways group from Singapore, Pacific Dunlop's Ansell division and any number of GP groups such as Foundation Healthcare or Sonic Healthcare.
Whatever the strategy, investors continue to love Mayne Nickless. Its shares rose 18c to a three-year high of $7.37 yesterday.
Mayne Offloads To Alpharma
Australian Financial Review 10/09/2001
Australian health care and logistics group Mayne Nickless Ltd expects to complete the sale of Faulding's US-based oral drugs business to Alpharma Inc for a total of $US660 million ($1.3 billion) in December.
----------------------
``The sale is expected to occur in December 2001 following the reorganisation of the Faulding business,'' it said.
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Faulding's health-care unit is the only business that Mayne will retain.
---------------------
Analysts said the sale of Faulding's offshore businesses would give Mayne a war chest of more than $2 billion and the potential to raise a further $2 billion in debt to embark on another acquisition.
Mayne looks to buy more.
The West Australian 10/10/2001
Abstract:-- - Australasian Business Intelligence:
The company's chief executive, Peter Smedley, said the company's new business model could be readily transported into new markets. Opportunities were available to leverage the Australian business model internationally - supported by the strength of the company's health and logistics enterprises throughout Asia, Smedley said.
New-look Mayne Is A Top 30
Company
The Age 10/11/2001
Mayne Nickless chief executive Peter Smedley will complete the symbolic makeover of the health-care and logistics group when he asks shareholders to approve a name change to Mayne Group Ltd.The change, which comes as the group rises into the ranks of the 30 largest listed companies, will bring the group's name into line with the new image being created in the current round of branding and image advertising.
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While completely reshaping Colonial Mutual Life ahead of demutualisation, he changed the life insurer's name to Colonial Ltd.
Reputation
Australian Financial Review 10/12/2001
A new Australian study shows that a CEO's reputation has an enormous impact on the standing of the entire organisation Australian CEOs are getting a reputation for ignoring their reputation.
---------------------------Last month a major piece of research confirmed that the highly regarded CEO is more than someone who just blows their own trumpet. A CEO's reputation actually has an enormous impact on the entire organisation's standing. The Australian study, using similar methodology to established US research, has confirmed that the external perceptions of an organisation rest increasingly on the chief's shoulders.
----------------------
The study - - - - canvassed two key reputation-forming groups in Australia - financial media and analysts. - - -
-------------------------
Breaking that total figure down shows that for financial media the reputation of the chief makes up 64 per cent of the company's reputation, while for analysts the figure is 41 per cent.The results also confirmed that a "brand name" CEO can bring substantial value to an organisation when they are appointed. But they generally deliver no greater shareholder value over time - - -
Further research - - - has shown a strong correlation between Burson-Marsteller's reputation index and the level of total shareholder return.
--------------------
He argues that the halo effect is quickly replaced by market thirst for an indication of long-term direction
------------------
The scrutiny does not stop there and is relentless. Peter Smedley's appointment as the boss of Mayne Nickless was quickly followed by unveiling of a strategy which earned positive market reaction. But the market is now wanting to see the next stage of Smedley's plan.
-------------------
The top elements affecting CEOs' reputations are, most importantly, believability, followed by maximising profitability, keeping a quality senior management team, using assets wisely, communicating vision to media and shareholders, demanding high ethical standards, caring about customers and responding effectively to change.
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Analysts understand expectations are built into the share price and a brand name will generate that shift. But maintaining the boost requires much more.
-----------------------------
Analysts, meanwhile, are keen to hear about company growth, industry direction and issues.
Mayne Nickless looks to Asia as
Faulding deal is mopped up
AAP News 10/16/2001
Doctors Take On Mayne
Australian Financial Review 10/22/2001
The Australian Medical Association has launched a bitter attack on the $6 billion health giant Mayne Nickless, accusing it of cherry-picking profitable patients for its private hospitals and turning away the elderly and chronically ill.Predicting a patient backlash against Mayne Nickless's 60 hospitals, AMA's Victorian president, Dr Mukesh Haikerwal, told The Australian Financial Review: ``The evidence presented to me by my members shows Mayne Nickless is discriminating against people with complex medical problems, in favour of people needing straight-forward surgery.''
-----------------------------
In a memo to Mayne Nickless management dated August 12, seven specialists expressed dissatisfaction with care at the corporation's Warringal Private Hospital in Melbourne, - - ''.
---------------------------
Their resignation letter from late last year, obtained by the AFR, says the hospital directions are profit-driven, are in conflict with ``what we believe is quality medical care'' and ``it appears medical patients are being downgraded''.Those described as ``medical'' patients tend to be elderly with multiple illness such as emphysema and pneumonia, who may occupy a bed for an unpredictable length of time, while ``surgical'' patients tend to be younger, healthier and in and out quickly.
---------------------------
A former director of emergency medicine at Mayne Nickless's John Fawkner hospital, Dr Richard Waller, says some ``private hospitals are turning away patients who are not profitable''. He says the practice of selecting more profitable surgical patients was actively discussed during his time at the Mayne Nickless hospital.
------------------------------
Summing up a common sentiment within the health-care community, one Mayne Nickless specialist told the AFR: ``With massive subsidies, private hospitals should be doing what is needed by patients and the community rather than what serves the interest of shareholders.''On top of the $2 billion, the Federal Government has also spent more than $25 million on pro-private advertising campaigns. And last year the industry funded a TV advertising campaign promoting private hospitals called ``Always there with Extra Care''.
----------------------
Details of the contracts between health funds and hospitals are closely guarded secrets, - - - - -
Health's Changing Landscape
Business Review Weekly 10/25/2001
Medicine was already a business when John Howard led the coalition into government in March 1996. But six years ago, it was a cottage industry, dominated by doctors working individually or in partnership groups. The landscape now is very different, and health is less a cottage industry than an industry dominated by big business.What separates health from other businesses, and leaves health companies widely exposed to the political process, is its heavy dependence on government funding. A change of government would have implications for the health sector, and particularly for the new corporate health sector.
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Listed medical companies receive a big part of their income from Medicare benefits. An estimated 75% of the $1.2 billion the Government paid in Medicare pathology benefits last year, and an estimated 60% of the $1.2 billion for radiology work, went to corporatised medical practices. In addition, about 10% of the $2.3 billion in Medicare benefits paid to general practitioners went to companies that were listed or were planning to be listed. Overall, at least 25% of the $7.5 billion-plus that will be paid in Medicare benefits this year will go to listed companies.
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In the Australian hospital sector, listed companies own about 13% of all hospital beds and 35% of private hospital beds. In aged care, about 35% of the beds are owned by public companies (including DCA) or large private companies.At September 30 this year, the market capitalisation of the 10 listed hospital and medical companies was $10.35 billion.
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Under the Howard Government, health has become a big area of business because of direct government funding and other specific government initiatives.
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Goodsall says pathology, radiology and general practice companies gain 75-90% of their income in Medicare payments.
-------------------------
The effect of Government measures is clear from the profit results of the hospital companies and health insurance funds.
---------------------------------
Wooldridge, who has held the post for the entire term of the Howard Government, is retiring from politics.
------------------------
On the increasing corporatisation of medicine, the Government has been quiet. It has not bought into any of the discussions by the medical profession and others canvassing concerns about corporate involvement.
-----------------------------
The AMA is no fan of corporate medicine: in August it issued a position paper detailing its concerns about the corporatisation of general practice. But any fee increases that Phelps may be able to negotiate for general practitioners would make the general practice companies more profitable, encouraging further corporatisation.
---------------------------------
The main reason general practices have been bought by companies such as Foundation is their powerful role in the health system. General practitioners are the gatekeepers who control the purchasing of lucrative downstream health services, including pathology, radiology and other specialist treatments.
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PRESCRIPTION FOR SPENDING* Australia's total health spending in 1999-2000 was $54 billion, or 8.5% of gross domestic product (GDP).
* The Federal Government provides $26 billion, or 48%, of the total. The rest comes from state and local governments (23%), individual payments (16%) and health insurance funds (7%). Other sources, for example, the Department of Veterans Affairs, account for 6%.
STREET TALK --- Midas Mayne has
punters foxed
Australian Financial Review 11/02/2001
Peter Smedley at Mayne Nickless has a problem, but it's one that many of his fellow chief executives would dearly love: $3 billion burning a hole in his back pocket.
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Perhaps Smedley is a victim of his own success: people expect the acquisition pace to remain fast.
Web Page
History
This page created November 2001 by
Michael
Wynne
Format changed Nov 2005
