Seven new homes for Southern Cross

Mar 4 2008 by Peter McCusker, The Journal

A FAST-GROWING care home company has spent £42m buying seven homes from a North East competitor – strengthening its position as the biggest business in its sector in the UK.

Darlington-based Southern Cross Healthcare Group recently revealed aggressive expansion plans and yesterday began pursuing them by beating rivals to acquire seven residential homes from Durham firm The Portland Group. It also said it has boosted its war chest by £46m to £106m.

Southern Cross – which is expected to announce further North East acquisitions within months – also revealed it had bought a care home in Worcester and secured a further £60m to take its acquisition fund to £106m.

The Portland Group, run by co-founder and managing director Alison Morgan, recently added two new bars to its Hide Bar & Grill chain and it is believed the cash from the sale may help with the further expansion of this concept.

Bill Colvin, CEO of Southern Cross, said: “The acquisition of the Portland Group not only adds another seven high quality, modern care homes to our portfolio, it also expands our care offering to include daycare, which I believe will become an increasingly important element of daycare.”

Three of the residential homes bought by Southern Cross are in Willington, the others are in Shildon, Washington, Benwell in Newcastle and Newbiggin by the Sea in Northumberland. The deal also included three day care units and 11 care bungalows.

In total the newly-acquired homes provide 368 elderly care beds plus 126 daycare placements.

Southern Cross announced in December that its profits jumped to £66.8m in the year to September 30, 2007, from £48.8m in 2006 on the back of a turnover rise from £610.9m in 2006 to £731.9m.

Mr Colvin said then: “It depends how successful we are with acquisitions next year but we should be adding between 2,000 and 3,000 new beds. It now has 36,800 residential beds and employs 46,000 people across the UK.”

Vinay Bedi, of Brewin Dolphin Wealth Management in Newcastle, said: “Southern Cross are expanding rapidly and we expect to see that growth continuing.”

Portland Group has been involved in the care home industry for over 20 years. It also provides support services for young and old including home help and respite and holiday breaks.

In 2006 it completed the purchase of the Hide Bar & Grill group for an undisclosed sum.

Earlier this year it added two new bars in West and North Yorkshire to its three original venues in Durham, Newcastle and Yarm.

Ms Morgan recently said: “Hide has been a successful concept offering high end contemporary dining and a stylish socialising environment in busy and up-market locations. I am keen to expand this business and the brand beyond the region.”

The Hide Bar & Grills operate as cafes during the day, then shift into contemporary dining and drinking venues in the evening. The Gate outlet is about to be rebranded as “Raw Hide”, said Ms Morgan.

The care home industry in the UK is believed by some analysts to be worth £12bn with around 450,000 beds.

The deal was brokered by Newcastle-based professionals from KPMG and Sintons Solicitors.

Andrew Scaife, associate director of KPMG’s corporate finance team, said: “We led a carefully controlled auction process, which secured an excellent price for the business and resulted in an extremely successful transaction for our client.”

Chris Welch, partner and head of Sintons’ company and commercial department, who with solicitor Adrian Dye handled the transaction, said: “The management team are highly driven and enthusiastic and have built the business to the size and scale where it was a very attractive purchase for the UK’s market leader in care homes.”