Priory sold to buyout group Waterland for £1bn

The US owner of the Priory, the mental healthcare chain, has sold the business to private equity firm Waterland for £1bn. 

Acadia Healthcare, the Nasdaq-listed US company, had been trying to sell the UK’s biggest mental healthcare business for more than a year after buying it for £1.3bn in 2016.

But the deal had stalled as a result of uncertainty because of Britain’s departure from the EU and the Covid-19 pandemic. 

The £1.08bn sale is less than Acadia paid for the Priory to Advent International, another private equity firm, four years ago but Brian Tanquilut, analyst at Jefferies, said it was “above most investors’ expectations”.

One person close to the sales process said this reflected the “top” price paid in 2016 as well as the fact that the business had shrunk after Acadia was forced to sell some divisions to address the competition regulator’s concerns.

The Priory, whose clients have included the model Kate Moss, footballer Ray Wilkins and singer Robbie Williams, has 450 facilities across the UK focusing on mental health and addiction rehabilitation, and special educational services.

Waterland, a Dutch private equity firm, already owns a similar business in Germany, with 120 clinics providing mental healthcare, rehabilitation and addiction treatments.

It had been seeking to expand to the UK, where it will extend the range of services provided by the Priory to include neurology and other post acute treatments.

In a statement Carsten Rahlfs, managing partner of Waterland, said the combined businesses would “deliver world-class healthcare services across Europe, encompassing rehabilitation and mental health treatments”.

Debbie Osteen, chief executive officer of Acadia, which runs about 582 behavioural healthcare facilities in the UK, the US and Puerto Rico, said it planned to use the proceeds to pay down debt. It expects the deal to complete in January.

Mental healthcare has been a big casualty of the UK government’s cost-cutting over the past decade, but this has benefited the private sector.

About a quarter of NHS mental healthcare beds in England are provided by the private sector, with 98 per cent of the private facilities’ earnings coming from the health service, according to Candesic, a healthcare consultancy. 

More recently margins have come under pressure owing to funding cuts and a rise in costs — particularly staffing, forcing a reliance on more expensive agency workers.

Private providers argue they have brought greater specialisation and choice to mental healthcare provision after it became one of the first parts of the NHS to be privatised amid a trend in the 1970s and 1980s to close large institutions.

But a series of scandals at mental healthcare facilities have damaged the reputation of many providers.

Rothschild advised on the deal.


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