AfroCentric down after green light for EOH deal
DURBAN – AfroCentric Investment's share price tumbled by more than 3 percent on the JSE on Thursdya despite the Competition Commission giving its proposed acquisition of Dental Information Systems Holdings (Denis Group) a thumbs-up.
The commission recommended the Competition Tribunal approve the R250 million deal between AfroCentric Health to acquire the Denis Group from EOH Abantu without conditions. AfroCentric Health has invested in the healthcare sector and it is the subsidiary of the JSE-listed investment holding company, the AfroCentric Group.
The commission said it had found that the proposed transaction was unlikely to result in a substantial prevention or lessening of competition in any relevant markets. AfroCentric's share price declined at one point to R3 a share in the afternoon.
In December, the AfroCentric Group announced it wanted to acquire the dental benefit management company from EOH Holdings’ subsidiary, EOH Abantu, to enable the group to focus on cost reduction and innovation in the dental treatment offerings to medical scheme members.
EOH intended to use the proceeds of the sale to be received by EOH Abantu primarily in reducing its debt, in line with its balance sheet deleveraging strategy and is expected to strengthen the capital structure of the EOH Group.
For AfroCentric the acquisition gives it access to most of the segments of healthcare, except the facilities or hospital sector, with a focus on three main areas of health administration, pharmaceuticals and corporate or workforce support.
Denis, established in 1996, owns health companies such as Medscheme, pharmaceutical distributor Pharmacy Direct, drug manufacturer Activo and several other health-related companies. It is one of only three managed care organisations accredited by the Council for Medical Schemes that specialise exclusively in dental benefit management.
Denis has a substantial market share and it is the only specialised dental benefit manager unaligned to AfroCentric’s competitors and is a registered managed care organisation specialising in managing dental benefits.
At the end of July 2019, Denis had net assets valued at R145.42m and its profit after tax attributable to net assets was R34.82m.