KKR undeterred by Ramsay rebuff and back for more

Ramsay Health Care chief executive Craig McNally.

Kohlberg Kravis Roberts is planning a return to the negotiating table of Ramsay Health Care in the new year after its earlier efforts to buy the business were rebuffed.

That’s according to sources who have suggested that KKR would make its move after Ramsay has offloaded real estate assets in the portfolio.

The $15bn Ramsay would push for a lower rental return on the assets, which would make its operating profit stronger.

This could make a price that KKR had earlier put forward for Ramsay more sustainable.

It would likely issue an in specie distribution for the European business, Ramsay Sante, of which Ramsay is a 52 per cent shareholder.

Ramsay counts the Paul Ramsay Foundation as its 19 per cent share holder and it is believed to be keen for a sale of the business.

Shares in Ramsay closed at $65.75, around the level that the company’s shares were at in April when KKR lobbed an $88 per share or $20bn offer – one it lowered later after conducting due diligence.

Sources say that investment bank UBS is undertaking preparatory work for Ramsay for a sale and lease back of its real estate assets, with a process likely to be launched next year.

The country’s largest private hospital operator has previously ruled out a sale of all of its $4.5bn-plus real estate portfolio, due to financial disadvantages from a tax perspective.

However, DataRoom understands that the company has signalled some assets can be offloaded without any big capital gains tax payments that would make the move counter-productive.

Ramsay has indicated that there may be some parcels of assets that make sense – accounting for about 25 per cent of its overall portfolio.

In Australia, Ramsay has 72 hospitals and day surgery units.