Aster DM Healthcare shares in focus as firm announces merger with Quality Care India; check contours of the deal

The two companies have signed definitive agreements to merge, subject to regulatory, corporate, and shareholders' approvals, Aster DM Healthcare (Aster) and Quality Care India Ltd (QCIL) said in a joint statement.

The merger will create one of the top three hospital chains in India in terms of revenue and number of beds, with 38 hospitals and over 10,150 beds with a strong presence across South and Central India in 27 cities, it added.

The merged listed entity will be named Aster DM Quality Care Ltd.

Contours of the deal

As part of the deal, Aster will purchase a 5% stake in QCIL from Blackstone and TPG in consideration of primary share issuance by Aster for a 3.6% stake in it as an initial share acquisition.

Subsequently, QCIL will be merged into Aster through a scheme of amalgamation. Aster expects the merger transaction to close by the third quarter of FY2025-26. The statement said the ratio for the initial share acquisition is the same as proposed for the merger.

The merged entity will be jointly controlled by Aster promoters and Blackstone, holding 24% and 30.7% ownership, respectively, it added.

Based on the agreed swap ratio, Aster shareholders will hold 57.3% and QCIL shareholders will hold 42.7% in the merged entity.

Aster DM Healthcare Founder and Chairman Azad Moopen will continue in his role as the executive chairman and will oversee the merged entity—Aster DM Quality Care. On the other hand, QCIL Group MD Varun Khanna will be the MD and Group CEO of the merged entity.

In a regulatory filing, Aster said that subject to mutually agreed thresholds, Moopen will continue as the executive chairman for a period of three years and six months, after which he will continue as the non-executive chairman.

Aster promoters will retain the right to appoint the non-executive chairman, with BCP having the right to appoint the vice chairman.

Blackstone Private Equity Head of Asia, Amit Dixit said: "We are committed to creating one of India's leading platforms in the healthcare sector...we will help grow the platform, expand its footprint, and develop it into a world-class healthcare institution."