Dr. Sulaiman Abdulqader Faqih Hospital Company, known as “Faqih Medical,” announced the full financial and legal details of its strategic acquisition of a 50.01% majority stake in Safwat Diagnostic Medical Company. The transaction, valued at SAR 70 million, was concluded with the related party, Sulaiman Abdulqader Faqih Real Estate Company, and aims to enhance the integration of the group’s healthcare services.
Details of the financial structure of the deal
In its official statement published on the Saudi Stock Exchange website “Tadawul”, the company explained that the structure of the total investment amount (70 million riyals) has been precisely divided into two main tracks to ensure transparency and financial efficiency:
- The first tranche (cash payment): This involves a payment of SAR 55.35 million to Fakieh Real Estate Company. This amount does not represent a profit for the seller, but rather compensation for costs previously incurred by the real estate company. These costs include SAR 52.3 million paid to the founders and for capital increases, in addition to SAR 3.05 million representing the cost of capital employed during the investment holding period. Accordingly, 30,506 shares of Safwa will be transferred to Fakieh Medical.
- The second component (liquidity injection): Fakieh Medical committed to directly injecting SAR 14.65 million into the capital of Safwa Diagnostics. This financial injection aims to fund the acquired company's future operational expansion plans, thereby enhancing its growth and competitiveness.
Investment opportunity with an attractive discount
One of the key points revealed by the company was the economic viability of the deal. The independent financial valuation showed that the indicative fair value of the acquired stake (50.01%) ranges between SAR 114 million and SAR 125 million. This means that completing the transaction for only SAR 70 million reflects a significant discount for Fakieh Medical, ranging between 38% and 44% compared to the fair market value, which benefits the company's shareholders and reduces the acquisition cost.
Healthcare sector context and future growth
This deal comes at a time when the healthcare sector in Saudi Arabia is experiencing rapid growth driven by the Kingdom’s Vision 2030 initiatives, which aim to improve the efficiency of medical services and enhance private sector participation. Mergers and acquisitions (M&A) in this sector are considered an effective way for large medical entities like Fakih Medical to expand their services both geographically and technically.
Acquiring diagnostic and support services companies like “Safwa” is a strategic step towards vertical integration, as it allows major hospitals to control the value chain, ensure the quality of medical examinations, and reduce operating costs in the long term, which positively impacts the patient experience and the group’s financial results.
The company concluded its statement by confirming that the transfer of shares will be at the actual cost price to the seller (Faqih Real Estate Company) without the latter realizing any profits, as soon as the regulatory procedures and necessary approvals for completing the transfer process are completed.
