Bank sells rehab clinics in £925m deal
A chain of private rehab clinics best known for helping wean celebrities off their addictions has been sold to private equity in a deal worth up to £925 million, it was announced today.
Part-nationalised Royal Bank of Scotland, which acquired the Priory Group in 2007 when it bought Dutch bank ABN Amro, has agreed to sell the specialist mental and healthcare firm to buyout specialist Advent International.
The disposal of the Priory Group, which has 66 sites across the UK, marks the end of a lengthy sale process for RBS.
It had hoped to float the Priory on the stock market last year, but is said to have shelved the plans due to market volatility, then exclusive talks with Bain Capital reportedly collapsed early last month.
The sale is thought to have been hampered by concerns over the impact of Government spending cuts on the Priory Group, with more than 75% of funding coming from the public sector.
The Priory has also been left with hefty debts after a series of takeovers in recent years and today's deal includes payment of borrowings.
RBS - 83% owned by the Government - said that, after payment of debts, it expects to receive equity proceeds of up to £133 million.
Advent is expected to complete the takeover by the end of March.
The Priory Group was founded in 1980 with the purchase of the Priory Hospital, Roehampton, by a US healthcare company.
It now operates hospitals, schools and care homes throughout the UK, providing treatment including for addictions, acute psychiatry, secure mental healthcare, specialist complex care and rehabilitation.
Priory management, led by chief executive Philip Scott, will retain a stake in the firm following the Advent deal.
Mr Scott said Advent was the "ideal partner" given its experience with healthcare investments around the world.
Advent's other healthcare assets include Craegmoor Healthcare, the UK's largest provider of specialist care for adults.
Thomas Allen, director of Advent, said: "As new investors, we are committed to maintaining the quality of care that has become synonymous with the Priory Group and look forward to working with Philip and his team to maximise the opportunities that exist in the UK healthcare market."
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