Dallah Healthcare Holding Co. [4004.SE] signed a purchase agreement to acquire a 10% stake in Meras Arabia Medical Holding Co. for SAR12.2mn. Meras Arabia Medical Holding is a group of 13 medical centres across Riyadh offering cosmetic dermatology, dental care services and other general healthcare services. The transaction, which will be financed internally, raises Dallah’s effective ownership to 28.9%, from 18.9% (which it indirectly owns through its investment in MIFIC Private Equity Opportunities Fund 3). Moreover, Dallah is planning to increase its stake gradually in Meras to 70% as part of its strategy to diversify its revenue sources through: i) an irrevocable option to buy the rest of MEFIC fund’s stake (44.3%) after it matures; and ii) two-year call option to directly acquire an additional 16% stake in Meras from its owners. Meras depends mostly on cash patients and saw its revenues up c18% Y-o-Y to SAR12.2 to SAR67mn in 2018, while earnings increased 22% to SAR14mn. (Company disclosure) 
 
Dallah Healthcare Holding Company: SAR43.20 as of 10 Dec 2019, Rating: Sell, TP: SAR38.00/share, MCap: USD864mn, DALLAH AB/4004.SE