Ramsay Health Care ‘close’ to deal on European unit

Ramsay Health Care owns 52.3 per cent of Ramsay Sante, the second largest private care provider in Europe and based in France with 465 hospitals, clinics, primary care and imaging centres.

It’s been no secret that Ramsay Health Care has quietly had investment banks in the market assessing possible sale options of its European hospital business, Ramsay Sante.

But the fact the group came out and announced it had appointed Goldman Sachs to work on strategic options for Ramsay Sante while reporting its results on Thursday sent a clear signal.

The interpretation of the announcement by market experts is that Ramsay must have a buyer for the unit.

Otherwise, it would not have announced it had hired an investment bank in the event of facing embarrassment if no takers emerged.

Goldman Sachs is known to be one of Ramsay’s bankers, defending the company when it was subject to a buyout proposal in 2023, along with Swiss bank UBS.

Private equity firms have been paying a lot more attention to Ramsay Health Care of late, with expectations it could be closer to doing a deal on its non-Australia operations.

Telling was a recent write down of offshore operations, which typically happens just before a deal so a company can sell an asset at a price that meets the market.

It came after ex-Woolworths executive Natalie Davis took the reins of Ramsay as its new chief executive, after joining in October.

The British and European businesses have no synergies with Ramsay’s operations in Australia and are less profitable.

After it wrote down the value of the UK business by $305m and made a $64.5m tax provision to its European business Ramsay Sante, the market took this as a signal that Ramsay was ready to deal.

A number of private equity firms have been looking in the healthcare space in Europe, including Advent International and The Carlyle Group.

DataRoom reported in 2022 that Fresenius was running the ruler over the Ramsay Sante business for a possible purchase, but walked away.

Some analysts believe there is the potential for a private equity firm to build a pan-European hospital operator through a series of acquisitions, including that of Ramsay Sante.

Previously, it was thought that Ramsay could extract a price of about €1.8bn for the Ramsay Sante business.

Shares in Ramsay rallied last month when it said it would continue to review the business in the context of shareholder returns and it was actively assessing a range of strategies to unlock value and drive improved performance.

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.

Shares are now $36.18, rallying almost 7 per cent on the news on Thursday of a process for the European arm.

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 with 465 hospitals, clinics, primary care and imaging centres.

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 a growing ageing population, and it is eyeing the purchase or management contract of some of the hospitals in Australia owned by the cash strapped Healthscope, which is the country’s second largest private hospital operator behind Ramsay.

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

Ramsay posted a $104.9m loss for the six months to December as revenue gained 6 per cent, with higher costs hurting margins.