Priory Group, a chain of clinics in Britain best known for helping stars to kick drug addictions, was sold to Dutch bank ABN Amro by its private equity owners in a deal worth $1.5 billion.
The Netherlands' biggest bank said Tuesday's deal, worth 1.29 billion euros in equity and debt, with British buyout firm Doughty Hanson allows it to invest in a fast-growing company with multiple investment banking needs.
Priory's cashflow will also allow ABN Amro to issue debt as well as giving ABN Amro a real estate portfolio that includes 40 health care facilities, said Mike Nawas, global head of fixed-income capital markets at the Dutch bank. .
Priory's clients have included The Rolling Stones' Ron Wood and model Kate Moss and the group operates 1,700 beds at hospitals, care homes and specialist care facilities, including Roehampton, London's oldest private psychiatric hospital, ABN Amro said.
ABN Amro also plans to sell stakes in Priory to other investors but will hold onto the largest share in the business, albeit a minority stake, said Nawas.
ABN Amro hopes to boost its profit by selling the business investment banking products, such as interest rate derivatives, and loans.
Priory Chief Executive Chai Patel said: "Priory Group has the potential to act as a consolidator within its sector and this deal brings us a partner who not only shares our vision, but is able to back it with significant financing".
ING analyst Sigrid Baas said the principal finance deal builds on ABN's skills in investment banking and could provide the Dutch-based lender with additional revenues. "This is one of the transactions that was in the pipeline that has made them quite confident about their investment banking earnings outlook for the remainder of 2005," she said.
Doughty Hanson hired investment bank Rothschild to run the sale, which attracted interest from property investors, private equity and trade bidders, a source familiar with the situation said on Tuesday.
Priory Group was demerged from Westminster Healthcare as part of a 288 million pounds management buy-out in June 2002 in which Doughty Hanson acquired an 86 percent stake.