IHH Healthcare Berhad (IHH) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Island Hospital strengthens leadership in Penang and North Malaysia, supporting future growth, cluster strategy, and medical tourism capabilities.

• Island Hospital is a high-quality, ACHS-accredited facility with strong clinical capabilities, specialist pool, and centers of excellence in oncology and cardiology.

• The deal supports Malaysia's aspiration to be a leading medical travel destination, especially for Indonesian patients, leveraging Penang's strategic location.

• Acquisition complements existing assets and leverages Island's expertise in attracting foreign patients, enhancing IHH's position as a medical tourism powerhouse.

• Island Hospital's strong operations and clinical offerings support IHH's growth plans and future expansion opportunities.

Financial terms and conditions

• 100% equity stake acquired for MYR 3.9 billion (RM 3.9bn), including a land bank valued at MYR 220 million (RM 223mm).

• The deal values Island at 19-19.2x EV/EBITDA for 2024, with 2024E EBITDA at c.RM 207mm.

• Funding will be a mix of internal cash flows and debt, with leverage expected at 60-70%; proportions to be finalized.

• Island's net debt is about MYR 270 million.

• Deal expected to be EPS and ROE accretive from Year 2 (2026).

Synergies and expected cost savings

• Over MYR 200 million in synergies expected over five years, with MYR 25 million in the first year.

• Synergies include revenue (cross-referrals, medical tourism, marketing best practices) and cost (procurement, process optimization) drivers.

• Synergy plan is detailed and bottom-up, with confidence in achieving targets.