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A consortium of investors led by global investment firm KKR has today dumped its $20 billion takeover offer for private hospital operator Ramsay Health Care (ASX: RHC) that would have landed shareholders a healthy premium.
In a statement issued today, Ramsay says the KKR consortium elected to no longer seek due diligence access - a requirement to progress the proposal. As such, KKR has withdrawn its offer.
Under the proposal, Ramsay shareholders would have be entitled to receive $88 per share in cash, representing nearly a 37 per cent premium on the company’s closing price back when the deal was announced in April.
According to Ramsay’s statement, the consortium has indicated it remains committed to an alternative takeover proposal, disclosed yesterday by the hospital operator.
Under that secondary proposal, the consortium would not have to undertake the due diligence process but would pay $84.93 per share - an offer that Ramsay claims to be “materially inferior” to the initial tilt.
“In forming this view, the Ramsay Board had regard to both the lower implied value relative to the all-cash proposal, as well as structural challenges, execution complexity and the low liquidity of Ramsay Santé shares,” Ramsay said.
“The Ramsay Board determined not to engage further with the Consortium in relation to the Alternative Proposal on these terms but was continuing to actively engage with the Consortium in relation to the Indicative Proposal until it was withdrawn today.
“Ramsay is prepared to engage with the Consortium to determine whether it can put forward an improved binding proposal that is capable of recommendation by the Ramsay Board.”
The news comes alongside Ramsay announcing its FY22 results, with the company disclosing its net profit after tax fell by 25.9 per cent to $370.2 million.
While revenue was relatively stable when compared to FY21 ($13.7 billion vs $13.3 billion), EBIT dipped by 21.3 per cent to $891.3 million. The company says its results were impacted by COVID-19 and restrictions on elective surgery.
“FY22 proved again the resilience of Ramsay's people and business in the face of further severe disruption from COVID. I would like to thank our people and partners for continuing to work with us to support our patients, navigating the difficult operating environment while transitioning to the next phase of the pandemic,” Ramsay CEO and managing director Craig McNally
"We have maintained our focus on the Group's medium to long term strategy continuing to invest to optimise our world class hospital network for future demand while entering into new and adjacent services. To support this we are investing in our digital and data road map, and have continued Ramsay's long standing commitment to research and clinical trials. These investments place Ramsay in a strong position within the sector to benefit from the growth in demand for healthcare services over the medium to long term.
"A key focus over the next few years is the recruitment and retention of our workforce. We are investing in our people to develop the leadership that will enable us to be successful well into the future.”
Shares in RHC are down 4.66 per cent to $69.52 per share at 2.24pm AEST.
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