Nestor buys into prison healthcare

NESTOR HEALTHCARE yesterday announced a raft of acquisitions, breaking into the prisoners' health market and buying a company that brings Australian and New Zealand nurses to Britain.

Nestor said it had spent nearly pounds 9m on seven purchases since June, about half in cash. The biggest buy was Forensic Medical Services Limited (FMS) and a sister company, bought for an initial pounds 4.5m.

"The acquisition of FMS, the market leader in prison healthcare, gives us an exciting opportunity to enter a rapidly growing sector." Nestor chairman David Heywood said.

FMS provides primary care in eight prisons, two secure training centres and one immigration detention centre.

Britain has privatised some of its 160-odd prisons, outsourcing security and other services. "We're already supplying nurses to prisons. This acquisition is a strategic development for us into a market that we feel will grow," Justin Jewitt, Nestor's chief executive, said.

Operating profits at the two FMS companies for 1998, before payments to directors, were pounds 641,000.

Nestor said it made the initial payment with deferred loan notes. It will pay more for FMS depending on profits in the 12 months after completion.

In May, Nestor said its strong trading performance, reported at the time of its full-year results in mid-March, had continued. It announced 1998 pre-tax profits of pounds 12.7m, up 30 per cent on the previous year.

After yesterday's news about corporate spending, Nestor's share price rose 21p yesterday to close at 470p.

The six smaller acquisitions were all in the health business and had aggregate turnover of pounds 7.7 m in their latest full-year results, generating a combined operating profit of about pounds 560,000.

Nestor said it paid pounds 1.35m in cash for IPA Healthcare Pty Ltd (IPA) of Melbourne, Australia. It specialises in recruiting Australian and New Zealand nurses to work in British hospitals and nursing homes.