Behavioural health service provider Cambian (CMBN) is selling its adult business for £377m to American hospital management company Universal Health Services (UHS:NYSE)

This deal should return the business to rude health. Significantly, the proceeds will repay Cambian’s £293m of debt in full and still leave it with £40m to fund a 22p special payout and put it in a position to resume ordinary dividends.

The social care provider has agreed (5 Dec) to sell its adult services unit to Cygnet Health Care, part of Universal Health Services, for what looks like a good price.

Reflecting high levels of interest in the business, the proceeds represent an earnings multiple of 15.6 times. Crucially, the deal leaves Cambian, which previously ran into difficulties following some overly ambitious expansion, in ruder financial health and free to focus on rolling out its Children’s Services Business.

This offers significant opportunities for growth, development and the creation of shareholder value against a backdrop of growing demand for the critical services Cambian provides.

In addition to the special dividend, one implying a 16.1% yield at 136.75p, Cambian plans to resume its progressive dividend policy, with a payout likely to be declared around the time of the half year results in 2017.

Canaccord Genuity has upgraded its rating from ‘speculative buy’ to ‘buy’ and price target from 118p to 150p following the sale.

With operational issues behind it and this deal transforming the balance sheet, Cambian looks interesting again at 136.75p. (JC)

‹ Previous2016-12-08Next ›