Healthcare firms and too-hot-to-handle global markets
Why do local firms get it so wrong when they venture abroad?
When private hospital group Netcare announced a £2.2-billion (R38-billion) deal in 2006 to buy a controlling stake in the UK's biggest private hospital group, General Healthcare Group, it confidently proclaimed that the transaction would boost earnings and open the door to further expansion in southern Europe. Instead the venture became an albatross around the company's neck, and just before Easter this year it announced its exit from the UK. Investors cheered the decision and the share price shot up 10%. Netcare is but one of an ever-growing list of South African companies that have expanded offshore with great fanfare, only to get their fingers burnt. Others include retailer Woolworths, which recently announced a R7-billion write-down of its Australian business, private equity firm Brait, which came a cropper with its £783-million purchase of British high street retailer New Look in 2015 and ultimately wrote it down to nothing, and Famous Brands, which faced huge write-downs on a ...
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