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Post Market Wrap | Cash offer for Ramsay Health Care shares lodged by KKR led Consortium



A $88 cash offer for Ramsay Health Care shares lodged by KKR led Consortium

  • Offer price values Ramsay at A$20.1B and is a 37 percent premium to last traded share price  
  • Ramsay Foundation, a 20 percent shareholder, is supportive of Consortium offer
  • Consortium undertaking due diligence to enable binding offer to be put to shareholders
  • Offer has Board approval, and a subsequent binding offer is likely to receive shareholder support.

Ramsay Health Care Limited (Ramsay or the Company) is Australia’s largest private hospital operator, owning 72 private hospitals. Founded in 1964 by Paul Ramsay, the Company listed on the ASX in 1997 and employs 86,000 people globally, across 10 countries, in over 460 locations. 

Ramsay’s global operations are spread across four regions, including Australia. Ramsay Santé is Europe’s second largest private care provider, operating from over 350 locations that employ 36,000 staff. Ramsay UK has a network of 34 acute hospitals and day procedure centres that employ 7,300 people. This UK presence has been boosted with the strategic acquisition of leading mental healthcare provider, Elysium Healthcare, in December 2021. In Asia, Ramsay employs 4,000 people and operates three hospitals in Indonesia, three hospitals and a nursing college in Malaysia and one day surgery in Hong Kong. 

A$88 cash offer 

A Consortium led by New York based global investment bank Kohlberg Kravis Roberts & Co., (KKR) has offered A$88 a share to buy 100 percent of Ramsay under a Scheme of Arrangement. KKR is a major player in private equity buyouts around the world.

Ramsay was obliged to confirm the offer to the market today, following media speculation about the proposal. The offer, which has the support of Ramsay’s largest shareholder, the Ramsay Foundation, represents a 37 percent premium to the price where Ramsay shares last traded. Ramsay Foundation owns 20 percent of the Company. The offer places a value of A$20.1 billion on Ramsay. Directors have agreed to provide the Consortium with due diligence on a non-exclusive basis to enable a binding proposal to be brought before shareholders.

The Consortium has structured its proposal as Scheme of Arrangement (Scheme). A Scheme requires shareholder and Court approval and may take three months to implement. However, a Scheme provides all parties with certainty in that once approved, it is binding on all shareholders.    

Image: file

Next Step

The A$88 cash offer was expressed to be confidential, and the Consortium has the right to withdraw the proposal if it ceased to be confidential. This is unlikely to occur, because the Consortium has already secured board and key shareholder support at the agreed price.

KKR is a major player in buyouts around the world and through its private equity arm owns French private hospital group, Elsan. Twenty-eight thousand employees and 7,500 doctors service the needs of 2.2 million patients a year at Elsan. Ramsay’s significant European presence appears complementary to Elsan’s well established French business operation. This may partly explain why a Scheme has been proposed by the Consortium, because it can more efficiently respond to any regulatory scrutiny that may arise, given the likely dominance of the merged hospital owner and operator in Europe. The buy-out offer is also certain to attract the attention of the Foreign Investment Review Board here in Australia.    

The proposal has the support of the Ramsay board and the KKR led Consortium has the cash to complete the proposal. Once the necessary regulatory approvals have been secured, a binding proposal can be brought before shareholders and is likely to be approved.    

This Post Market Wrap is presented by Kodari Securities, written by Michael Kodari, CEO at KOSEC.

"Michael Kodari is one of the world's most consistent, top performing investor. A philanthropist and one of the prominent experts of the financial markets, he has been referred to as ‘the brightest 21st century entrepreneur in wealth management' by CNBC Asia and featured on Forbes. Featured on TV as the "Money Expert", on the weekly Sunday program "Elevator Pitch", he is recognised internationally by governments as he was the guest of honour for the event "Inside China's Future", chosen by the Chinese government from the funds management industry, attended by industry leaders, when they arrived in Sydney Australia, on April 2014. Michael and George Soros were the only two financiers in the world invited and chosen by the Chinese government to provide advice, and their expertise on Chinese government asset allocation offshore. With a strong background in funds management and stockbroking, Michael has worked with some of the most successful investors and consulted to leading financial institutions. He was the youngest person ever to appear on the expert panel for Fox, Sky News Business Channel at the age of 25 where he demonstrated his skillset across a 3 year period forming the most consistent track record and getting all his predictions right over that period. Michael writes for key financial publications, is regularly interviewed by various media and conducts conferences around the world."

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