KKR-led group ups $14.7bn bid for Ramsay Health Care

A consortium led by global New York-based investment firm KKR has bid around US$15 billion for global Australia-based hospital operator Ramsay Health Care.

Following the announcement, Ramsay’s shares jumped 29%, sitting at A$82.99 at the time of writing.

Under the nonbinding, indicative proposal from the consortium, Ramsay shareholders would be entitled to receive A$88.00 per share cash, less any ordinary or special dividends paid to shareholders after the date of the indicative proposal (including the ordinary dividend of A$0.485 per share paid on 31 March 2022). Ramsay shareholders would have the option to receive part of the consideration in unlisted scrip in the consortium holding entity.

Health Employees Superannuation Trust Australia (HESTA), an Australian super fund dedicated to health and community services, has announced that it is part of the KKR-led consortium. Abu Dhabi Investment Authority (ADIA), an investor that invests on behalf of the government of Abu Dhabi, is also among investors in the consortium led by KKR, according to Bloomberg.

If completed, the takeover would rank as the biggest private equity-backed buyout of an Australian company and would be the biggest deal in Australia this year, Reuters reports.

Ramsay Health Care is Australia’s largest private hospital operator. It operates hospitals and clinics in 10 countries including France, the UK and Italy with a network of more than 532 locations. In December 2021, Ramsay Health Care paid £775 million for UK’s mental healthcare group Elysium Healthcare.

Ramsay has appointed UBS AG, Australia Branch and Herbert Smith Freehills as financial and legal advisors respectively.

On 26 March, Fitch Ratings, the provider of credit ratings, commentary and research for global capital markets, revised the Outlook on Ramsay’s long-term Issuer Default Rating (IDR) to negative from stable as leverage has been higher than expected.

Fitch believes that higher-than-expected costs due to the outbreak of the Omicron variant of Covid-19 and ongoing ramp-up issues facing the healthcare sector will delay the return of Ramsay’s leverage (total adjusted debt/EBITDAR) to below 3.3x, the level at which we may take negative rating action.

Post updated on 26 March

Date published: April 21, 2022

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