KKR still keen on Ramsay Health Care, with new offer likely

It is understood that at least one European hospital operator had been in talks to buy part or all of Ramsay Sante, but it walked away due to a lack of firepower to fund an acquisition.

Kohlberg Kravis Roberts is understood to remain in pursuit of Ramsay Health Care, as solutions are sought for its French assets.

DataRoom has learnt that French private hospital business Ramsay Sante, which is 52.5 per cent-owned by the Australian-listed Ramsay Health Care, has engaged Rothschild & Co to find potential buyers of the business.

It is understood that at least one European hospital operator had been in talks to buy part or all of Ramsay Sante, but it walked away due to a lack of firepower to fund an acquisition.

A Middle Eastern healthcare group may be showing interest, while large European family offices have recently been buying in the healthcare space – the Maersk shipping family bought Spanish pathology operator Unilabs last year.

It is unclear whether Rothschild is testing interest for all of Ramsay Sante, Ramsay’s stake in Ramsay Sante or both.

Goldman Sachs and UBS are working as defence advisers for Ramsay, while KKR is advised by Barrenjoey and Credit Suisse.

Ramsay’s largest shareholder, The Paul Ramsay Foundation, which owns 19 per cent, is working with Adara Partners.

Sources say that Ramsay recently left the contest to buy the Healius day hospitals which have been up for sale through Gresham.

Sources earlier said that Ramsay had made the shortlist in the competition, along with Queensland Investment Corporation, which owns Nexus day hospitals, and Healthscope private hospital owner Brookfield.

However, sources now say the owner of Cura Day Hospital Group, Fresenius, is among the shortlisted bidders, with the company potentially being ushered through to round two on the back of Ramsay’s departure.

First-round bids are due in the week of September 19. The final part of the competition will be limited to two bidders.

The unit is expected to sell for $150m to $200m.

Just over a week ago, Ramsay told the market that private equity firm Kohlberg Kravis Roberts had pulled a $88-per-share cash offer it made for the company in April, subject to due diligence.

An alternative offer from KKR was still on the table: $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 depend on due diligence on Ramsay Sante.

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

Earlier, Ramsay said the Ramsay Sante board was seeking further information from KKR and its backers to assess its request for due diligence.

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

Now sources say KKR is still hard at work on Ramsay to come up with a revised offer.

The understanding is that Ramsay and KKR are keen to do a deal, as is The Ramsay Foundation.

Shares are way off the informal offer price of $88 that KKR put forward in April, trading on Friday at about $72, or $16bn for the company as a whole, but Ramsay’s share price will probably fall substantially if KKR walks away.

The reasons why KKR struggled to gain access for due diligence on Ramsay Sante are believed to be the fact that it owns a competing private hospital operator in Europe and the fact that Ramsay Sante’s other major shareholder, the Credit Agricole-owned Predica, would have its interest diluted should the business fall into KKR’s hands.

Another company may have better chances of gaining due diligence access.