Australia's Ramsay Health Care rebuffs revised KKR buyout offer

In April, the consortium submitted a bid for what would be Australia’s largest PE buyout outside the infrastructure and utility space. It offered AUD 88.00 per share for all outstanding shares, less any subsequent dividend payments, which equates to a market capitalisation of AUD 20.1bn (USD 13.9bn). Shareholders could cash out or roll over a portion of their interests into the acquisition vehicle.

Ramsay’s board permitted non-exclusive due diligence, and this was completed satisfactorily. However, moving from an indicative to a binding proposal was also subject to accessing non-public information on Euronext-listed Ramsay Santé. A request was made to the Ramsay Santé board – Ramsay owns 52.8% of the business – and the board sought further information.

The consortium has now withdrawn the indicative proposal and put forward an alternative that is not dependent on access to Ramsay Santé, according to a filing. The Ramsay board decided to end engagement over the alternative, deeming it inferior to the original. It said that dialogue continues with the consortium regarding the indicative proposal.

The consortium’s alternative includes a price of AUD 88.00 per share, less any dividends, but only for the first 5,000 shares held by each shareholder. For each additional share, it would pay AUD 78.20 in cash and approximately 0.22 Ramsay Santé shares. Under this scenario, the consortium would retain a 15% interest in Ramsay Santé, with Ramsay shareholders taking the rest.

The Ramsay board calculated that 18% of shares would be eligible for the AUD 88.00 offer. The remaining 82% would receive the cash-plus- Ramsay-Santé-shares combination, which equates to AUD 84.93 per share, based on Ramsay Santé’s August 24 closing price.

Ramsay’s stock closed down 3.32% at AUD 70.50 on August 26, giving the company a market capitalisation of around AUD 16.1bn. Ramsay Santé was up 2.83% on EUR 21.80 for a market capitalisation of EUR 2.34bn (USD 2.33bn).

Ramsay Santé accounts for the largest portion of Ramsay’s revenue and EBITDA, contributing AUD 7.06bn and AUD 1.04bn in the 12 months ended June 2022. It has approximately 350 specialist clinics and primary care units in France, Denmark, Norway, Sweden, and Italy. The business has 36,000 staff who treat around 7m patients every year.

In Asia Pacific, Ramsay has 72 private hospitals and day surgery units, plus a pharmacy retail franchise, in Australia and – through a joint venture with Malaysia's Sime Darby – six hospitals, a nursing college and a day surgery across Indonesia, Malaysia, and Hong Kong. Asia generated AUD 5.36bn in revenue and AUD 713.6m in EBITDA for the year, almost all of it from Australia.

In the UK, there are 34 acute hospitals and day procedure centres, three neuro-rehabilitation facilities, and a 72-site operation for patients with mental health conditions. Revenue and EBITDA reached AUD 1.32bn and AUD 80.1m.

On an overall basis, Ramsay’s revenue rose from AUD 13.3bn to AUD 13.7bn, EBITDA fell from AUD 2.05bn to AUD 1.83bn, and net profit slid from AUD 511.5m to AUD 379.2m. Mainland Europe, through Ramsay-Santé, was the only geography to post an increase in EBITDA, while its net profit more than doubled in euro terms.

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• Topics
• Australasia
• Buyouts
• Healthcare
• Europe
• Australia
• KKR