Q & M Dental to acquire Australian group for $131.5m

The company intends to acquire 100% of the group's issued share capital.

Q & M Dental Group (Singapore) Limited has signed a non-binding memorandum of understanding to acquire an Australian dental group for $131.5m (AU$144.5m).

The company intends to acquire 100% of the Australian group’s issued share capital, it said in a bourse filing.

The consideration is subject to adjustments following financial due diligence and will be paid through a mix of capital injection, cash payments, and newly issued shares.

Q & M will inject $27.3m (AU$30m) into the group after completion to repay the target’s outstanding loans.

Another $54.1m (AU$59.5m) will be paid in cash to the sellers, including $37.1m (AU$40.75m) upon completion and $17.1m (AU$18.75m) a year later, subject to the sellers meeting a profit guarantee target for the first year.

The remaining $50.1m (AU$55m) will be satisfied through the issuance of new ordinary shares in Q & M at an issue price of $0.70 per share, subject to a 15-year moratorium.

The proposed transaction will also be supported by a profit guarantee of about $96.2m (AU$105.7m) over seven years following completion.

Q & M said that the acquisition supports its long-term strategy of expanding beyond Singapore whilst strengthening its presence in the Asia-Pacific region.

“The Australian dental group’s network of dental clinics provides a strategic operating base that can be further expanded over time through organic growth and potential future acquisitions,” it added.

The sellers of the Australian group, comprising eight founding dentist-shareholders, are expected to enter into 15-year service agreements and remain involved in the business after the acquisition.

$1 = AU$1.10