Shares in Ramsay Healthcare
(ASX:RHC) slumped on Tuesday as two deals thought to be in the hand vanished in a matter of days with only a brief explanation to the market and shareholders.
The first deal involving the sale of Ramsay’s hospitals businesses in Malaysia and Singapore vanished late last week.
The second, a $28 billion acquisition by KKR and a group of other investors that would have been 2022’s biggest Australian takeover, collapsed after weeks of talks failed to make any progress.
So down went the shares on Tuesday – dropping around 10% to $62.942 after dipping under $60 at one point, leaving them nearly 30% under KKR’s original offer price.
KKR pulled its first $88 per share offer in late August and pitched an alternative which was described by some analysts (and Ramsay) as weaker.
KKR and its group had been unable to gain access to due diligence at Ramsay’s operations in France and instead wanted to acquire Ramsay’s Australian operations and spin-off its 52.8% holding in France’s Ramsay Sante back to Ramsay investors.
KKR’s alternate proposal would see all Ramsay shareholders paid $78.20 cash for Ramsay’s Australian operations, before getting either cash or scrip for the stake in the French operations.
Ramsay’s small parcel holders – those with 5,000 shares or less, which is by far the majority of the group’s investors by number – would have been paid $88 in cash, while those with more than 5,000 shares would receive shares in the French company.
Ramsay’s board wanted KKR to stick the first offer price, or improve the terms of its alternate proposal.
That seems to have been the sticking point and on Monday night KKR told Ramsay no $88 offer in cash and it would not improve its alternate proposal.
In a one-page statement on Tuesday, Ramsay explained:
“The latest correspondence received from the Consortium refers to its review of Ramsay’s FY22 result announcement and notes that it is not in a position to improve the terms of the Alternative Proposal.
“The correspondence also states that whilst the Consortium recognises that further engagement and access to further due diligence may provide some positive visibility, the information provided in the FY22 results implies that there is meaningful downward pressure on the valuation proposed under the Alternative Proposal.
“The correspondence also stated that should the Ramsay Board be willing to reset valuation expectations and consider a new proposal, the Consortium would move quickly to discuss mutually acceptable terms.
“The Ramsay Board is yet to consider the correspondence which was received late yesterday evening and appeared in media reports early this morning, however there is no certainty that any further proposal will be forthcoming or that any proposal would result in a transaction,” the letter ended.
