Ramsay Health Care secures $14.8 billion bid from KKR-led consortium; stocks soar

Trading information for KKR & Co is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 23, 2018. REUTERS/Brendan McDermid

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  • Ramsay receives a proposal of A$88 in cash per share
  • Proposal with a premium of 37% at the last close of Ramsay
  • Ramsay shares up 29.8% at start of trade

April 20 (Reuters) – Ramsay Health Care Ltd (RHC.AX), Australia’s largest private hospital operator, said on Wednesday it had received an indicative takeover offer of A$20.05 billion ($14.80 billion). dollars) from a consortium led by private equity giant KKR & Co (KKR.N).

The non-binding proposal of A$88 in cash per share represents a nearly 37% premium to Ramsay’s Tuesday closing price of A$64.39. The offer sent shares of the hospital operator soaring as much as 29.8% to A$83.55 at the start of trading, their biggest intraday jump on record.

Ramsay said in a statement that he would provide the KKR-led consortium with due diligence on a non-exclusive basis and talks were at an early stage.

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The hospital operator said it had reviewed the proposal with its advisers and requested additional information from the consortium regarding its funding and the structure of the deal.

KKR did not immediately respond to a request for comment from Reuters.

If successful, the takeover would be Australia’s largest this year and nearly double deal activity, which, worth a total of $17.4 billion, suffered a 41.2 drop % in the first quarter compared to the previous year, according to data from Refinitiv.

The proposal comes as historically low interest rates prompt private equity firms, pension funds and pension funds with ample liquidity to invest in health and infrastructure assets.

The deal would also rank as the second-largest private equity-backed deal in Australia, after the A$31.6 billion ($23.35 billion) consortium enterprise value deal. for Sydney Airport last year. Read more

The pandemic has hit healthcare operators, including Ramsay, with elective surgeries halted, staff shortages due to isolation regulations and upward wage pressure weighing on profits and hurting stocks, making the sector relatively affordable for a buyout, compared to a few years ago. .

Last year, Australian biopharmaceutical giant CSL Ltd (CSL.AX) announced that it would buy Swiss drugmaker Vifor Pharma AG (VIFN.S) for $11.7 billion. Read more

Ramsay operates hospitals and clinics in 10 countries on three continents, with a network of more than 530 locations, according to its website.

It has 72 private hospitals and day surgery units in Australia, while it operates clinics and primary care units at around 350 sites across six countries in Europe.

KKR currently owns French healthcare group Elsan.

Earlier this year, Malaysia’s Ramsay and Sime Darby Holdings received a $1.35 billion takeover bid from IHH Healthcare Bhd (IHHH.KL) for their joint venture in Asia. Ramsay said he is still pursuing this transaction.

The hospital operator has hired the Australian branch of UBS AG and Herbert Smith Freehills as financial and legal advisers, respectively, for the KKR-led consortium’s proposal.

($1 = 1.3535 Australian dollars)

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Reporting by Harish Sridharan in Bengaluru; additional reporting by Byron Kaye in Sydney; Editing by Sriraj Kalluvila, Aditya Soni and Krishna Chandra Eluri and Rashmi Aich

Our standards: The Thomson Reuters Trust Principles.

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