Castlebeck, the care company at the centre of allegations of abuse against vulnerable patients, is set to be taken over in the latest example of deal activity in the healthcare services sector.
Partnerships in Care, run by the private equity company Cinven, is among the potential buyers of Castlebeck, which provides specialist health and rehabilitation services for adults with learning disabilities and complex needs, according to a report from Health Investor magazine.
Castlebeck ran the Winterbourne View care hospital near Bristol, which was closed last year after a BBC Panorama programme uncovered a regime of systematic ill-treatment of patients. Eleven former members of staff admitted criminal offences of neglect or ill-treatment.
At Winterbourne View, Castlebeck was charging an average £3,500 a week for each of up to 24 patients but providing an environment that, in the words of a subsequent serious case review, “raised the continuous possibility of harm and degradation”.
Sean Sullivan, a business turnround specialist brought in last November, has been working to restore Castlebeck’s reputation. Two units have closed while the remaining 20 care homes in England and Scotland operating under the Castlebeck brand have been refurbished and re-equipped at a cost of £3m. Together, the homes have the capacity to house 350 people. The company employs 2,000 staff.
Castlebeck was bought by Lydian Capital Partners, an investment club for entrepreneurs, for £255m in 2006.
But the hospital and care-home operator, which was facing a significant refinancing process, was in effect taken over by its banks, led by RBS, in the wake of the Winterbourne scandal. It had borrowings of £431m at the end of 2010, including £223m owed to its bankers, and a further £200m owed on investor loan notes.
Castlebeck said: “We cannot comment on rumours. However, as part of the turnround of Castlebeck, the new board, as you would expect, is considering a number of options to focus on delivering the highest standards of person centred care to its service users.”
Partnerships in Care declined to comment.
News of a potential deal comes amid an increase in merger activity in the healthcare sector, with two of Castlebeck’s rivals up for auction.
Cambian Group, which is backed by US private equity firm GI Partners, is being advised by Rothschild on a sale. Meanwhile, the privately owned Cygnet Healthcare has appointed the investment bank Jefferies to find a buyer.
Research from Laing and Buisson, the healthcare intelligence specialist, has found that private-sector groups generate annual revenues of £1.1bn from running mental health hospitals – with Partnerships in Care, not-for-profit group St Andrews Healthcare, Priory Group, Cygnet HealthCare, and Four Seasons Healthcare among the leading operators.
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