Estia Health on acquisition spree, sees ‘massive opportunity for aged care in Australia’

Funding under the deal will be made through existing debt facilities, along with issuance of about $50 million worth of Estia stock to the Kennedy family, who are 100 percent owners of the business. The balance will be paid in cash. With this deal, Estia’s total acquisition spending during 2015-16 has increased to around in $400 million.

Kennedy Chairman Gary Weiss will join Estia's board as a non-executive director under the deal, while Managing Director Mark Kennedy will continue to hold the same position until the end of the current financial year.

"It is such an exciting time to build scale and then make a difference in the way we deliver service,” says Estia Health Chief Executive Paul Gregersen, who sees a massive opportunity for aged care in Australia. The Sydney Morning Herald quotes him as calling it a “once in a lifetime opportunity.”

In a research note, Bank of America Merrill Lynch analyst William Dunlop projects a 42 percent growth, by 2025, in the number of Australians receiving aged care services. The number currently stands at 200,000, according to his estimate. Dunlop says the top eight players in the business control just 46 percent of the private beds in the largely fragmented industry.

Kennedy Health Care Group’s business consists of eight facilities, with 959 operational places, in Sydney and Wollongong. With this acquisition, Estia’s total operating places has gone up to 5,690. Estia, which has so far acquired 1,690 additional beds in 2015-16, has targetted 10,000 beds by 2020.

Estia, which is on an acquisition spree, has also recently taken control of the Tea Gardens Manor in an $28 million deal, brokered by Colliers International. Earlier, in October, the company acquired three facilities in Adelaide and one on the Gold Coast.

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