Healius day hospitals sale narrows to QIC, Brookfield, Ramsay

Intermediate Capital Group – earlier considered the favourite to buy Healius day centres – was knocked out of the first round of the competition.

Queensland Investment Corporation, Brookfield and Ramsay Health Care are believed to be the three parties that have moved into the second round of the competition to buy day surgery hospitals from Healius.

The competition for the Healius day hospitals, advised by Gresham, is in round two, and the second round is understood to consist of two parts.

Offers for the first part of the second stage will be due in the week of September 19 and one or two parties will be ushered through to the final round.

DataRoom understands that Intermediate Capital Group – earlier considered the favourite – was knocked out of the first round of the competition, as was Alceon’s Special Medical Services business.

Pacific Equity Partners also did not make the cut after it was understood to have bid, nor Fresenius, which owns Cura Day Hospitals.

Queensland Investment Corporation owns Nexus Day Hospitals while Brookfield is the owner of Healthscope, Australia’s second largest hospital operator.

Ramsay is bidding for the business after it told the market on Friday that private equity firm Kohlberg Kravis Roberts had pulled its $88 per share cash offer it made for the company in April, subject to due diligence.

An alternative offer is on the table from KKR of $78.20 per share cash and 0.22 shares of the French hospital business Ramsay Sante.

It would see the consortium retaining a 15 per cent interest in Ramsay Sante and Ramsay shareholders receiving the balance of Ramsay’s shareholding in Ramsay Sante, equating to about 37.8 per cent.

This offer would not be dependent on due diligence on Ramsay Sante.

It came after Ramsay said that the Ramsay Sante board was seeking further information from KKR and its backers to assess its request for due diligence.

But the understanding is that KKR, which owns a competing hospital business in Europe, has been waiting for due diligence access in France for some time.

The KKR offer valued Ramsay at $84.93 as at August 24, but Ramsay has rejected the alternative offer.

Meanwhile, there has been some chatter in the market that should Ramsay have achieved a strong price for its business, Brookfield, too, may look to offload Healthscope that it purchased in 2019 when it was a listed company for $4.4bn.

The Healius day surgery business was formed from the purchase of the Montserrat group of seven day surgeries in 2018 for $138.5m.

Most of the earnings come from one site – the Westside Private day hospital in Queensland.

Healius is a major player in day hospitals in a fragmented industry, and Montserrat has experienced strong growth since being purchased by Healius.

For the six months to December, the Healius day centre unit generated $8.4m of earnings before interest, tax, depreciation and amortisation, down 19 per cent on the previous corresponding period.

Healius reports its full year results on August 30.