Private equity eyes Ramsay Health Care

Ramsay Health Care is the nation’s largest private hospital operator.

There’s an increasing amount of talk again about a deal involving Ramsay Health Care, with chatter that a private equity firm is pulling together a management team to run the business.

In recent days, fingers have been pointing to Kohlberg Kravis Roberts, with a view that it is again running the ruler over its former takeover target.

It knows the business well and was originally prepared to pay $88 a share, or $20bn, so despite all the challenges with funding private healthcare right now, it may now see Ramsay at good value with Ramsay’s share price at $40.

It’s still a big cheque, though, for any buyer, with a $9bn market value, so it means there’s only a few groups of scale that would be able to buy what is the nation’s largest private hospital operator.

Another one is Wesfarmers, which has seen its stock price trading at high levels, but the Perth-based conglomerate is known for its discipline and the talk in recent weeks is that Ramsay’s share price would need to be substantially lower for it to make a move.

It has the team in place to run the business and has carried out a lot of detailed work.

KKR is attracted to Ramsay, with more than $4bn of real estate that Ramsay owns attached to its hospitals and day surgery units, of which it has about 70.

As was the case last time around when KKR bid, any buyer would need to solve the challenge of the European business, of which Ramsay only owns 53 per cent and is considered the worst performer in the group portfolio.

Should KKR be the private equity firm looking at Ramsay, it would probably be calling on the services of Barrenjoey, the adviser it used last time, while UBS and Goldman Sachs have previously acted as defence advisers.

It is a busy time for mergers and acquisitions, with Pacific Smiles’s 20 per cent shareholder Genesis Capital coming back for a takeover bid at $1.90 a share, as announced on Tuesday, and Bigtincan receiving a revised proposal from Vector Capital at 20c a share, or about $164m.