Loss-making, debt-ridden Terveystalo, Finland’s largest healthcare operator, has been bought for €162 million by Bridgepoint. At first sight the price - €2 a share, a startling 200% premium - looks expensive. Bridgepoint is also taking on net debts of around €140m.

In exchange, it gets the marketleader in Finland, with 2007 sales of €230m and one hundred units, including 15 private clinic hospitals in more than 50 municipalities.

Terveystalo, which is quoted on the Helsinki stock market, disastrously overpaid for its 2007 acquisition of the occupation healthcare arm of Medivire, which left it barely capable of servicing debt levels.

Dominic Hollamby at NM Rothschild says that, in fact, Bridgepoint has not overpaid. Analysts were forecasting EBITDA of €30m for Terveystalo in 2008. 

Terveystalo will now square up to Mehilainen, the formidable, 3i-owned group competing in the €500m, 1.8 million people occupational healthcare market, where companies pay to provide healthcare services to their staff.

Our Analysis: The bottom line is that Bridgepoint has bought a company with sales of around €250m for just over €300m including debt. If it works hard, it should manage to eventually achieve a 10-15% pre-tax profit.

Mehilainen has done very well for 3i, which one Finnish analyst reckoned had effectively already quintupled its money. Perhaps that explains why Bridgepoint waited until it had 52% before going public with the offer! Expect Bridgepoint/Terveystalo to now make an acquisition in the greater Helsinki area where it remains weak – perhaps it will buy the main private hospital in the city, Lääkärikeskus Group. It will be interesting to see if it plans to move into the outsource healthcare market which should grow like topsy as municipalities privatize their elderly, domiciliary and even primary care.