The $2bn-odd Australian cancer care provider Icon Group has been tipped as a likely acquisition target for Ramsay Health Care in the upcoming months after Ramsay’s $1.4bn capital raising this week leaves it cashed-up for future deal-making.
Ramsay is understood to be interested in expanding its pharmacy business and Icon is thought to be attractive because of its compound pharmacy business, selling drugs not commercially available over the counter.
It also fits the bill for Ramsay because it is a business of scale and Ramsay has always looked at big ticket acquisitions that complement its existing network.
Greater scale in pharmacy for the country’s largest private hospital operator offers it end-to-end control of the healthcare network.
Icon Group — Australia’s largest dedicated cancer care provider — was sold by Quadrant Private Equity in 2017 to a consortium including the Queensland Investment Corporation, Goldman Sachs Private Equity and China’s Pagoda Investments for more than $1bn.
The plan at the time was to expand the business throughout Australia and Southeast Asia.
Ramsay has already been busy looking at targets in Australia, including Everlight Radiology.
It comes as Ramsay Health Care said this week that it was embarking on the largest capital raising of the year to create a $1.4bn war chest to accelerate its out-of-hospital growth strategy and become a fully integrated healthcare company.
Chief executive Craig McNally indicated the coronavirus pandemic had laid bare the risks of relying on hospitals for earnings growth and showed the need to integrate more health services into Ramsay’s global portfolio.
Ramsay began branching out from hospitals last decade, moving into Australia’s $16bn pharmacy sector.
The placement at $56 per share, a 12.9 per cent discount to the closing price on Tuesday, was so strongly sought by investors that many hoping to take up the stock missed out.
Ramsay shares closed at $60.52, down 5.86 per cent.
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