Market jumps on hint of Ramsay demerger or sale

Ramsay reported earnings before interest and tax of $512.3m, down 4.7 per cent.

Ramsay Health Care’s 7 per cent rally in its share price on Thursday is believed to have less to do with its result and more to do with a statement hidden away on one of its presentation slides for its half-year earnings.

On slide 20, Ramsay said it would “continue to review the business in the context of optimising shareholder returns” and it was “actively assessing a range of strategies to unlock value and drive improved performance from our portfolio of assets”.

Observers took this as the best sign yet the group was actively considering options for its European assets that some investors believe would be best demerged or sold.

Apparently, there’s work unfolding behind the scenes assessing options for its European arm, and the understanding is that investment banks UBS and Goldman Sachs are on hand to provide advice.

DataRoom reported in September that investors were lobbying the board, now led by David Thodey, for a restructure after suitor Kohlberg Kravis Roberts walked away from an initial proposal to buy the business in 2022 for $88 a share, or $20bn.

The share price is now $55, although it comes as healthcare providers across the board are dealing with tough industry conditions.

The hope has been to convince Ramsay to spin off Ramsay Sante and hand over the shares to investors through an in specie distribution.

The idea is that this could flush out a buyer for the French hospital operator and raise its share price.

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

Ramsay first purchased hospitals in France in 2010.

It owns 52.3 per cent of Ramsay Sante, the second largest private care provider in Europe and based in France.

Ramsay Sante has 443 hospitals, clinics, primary care and imaging centres across Europe.

Major equity holders of Ramsay Sante, listed on Euronext Paris, are Predica with almost 40 per cent, and Credit Agricole group’s personal insurance subsidiary.

Long term, Ramsay’s prospects are strong, with an expanding ageing population.

However, in the short term, healthcare providers are facing cost pressures with staff shortages.

Ramsay reported a 286 per cent increase in its net profit for the six months to December to $758.5m.

During the period it received $938.4m in gross proceeds from the sale of its Sime Darby asset in Asia that were used to pay down debt.

Ramsay said earnings before interest and tax of $512.3m, down 4.7 per cent, reflected an improved result from Australia, strong growth in the UK region, offset by a decline in earnings from Ramsay Sante.