Ramsay Health Care’s shares closed lower on Monday on the news that it had purchased Elysium Healthcare, as some questioned whether it was now having regrets about not buying Priory Health.
Some market analysts on Monday said they believed Priory was a better business, with more real estate and stronger synergies.
It was also cheaper.
Ramsay was considered a bid to buy Priory last year from Acadia Healthcare, but Priory instead was sold to private equity firm Waterland for £1.1bn.
The understanding is that Ramsay was deterred by the business mix, which included residential aged care, autistic education and children’s homes.
On Monday, Ramsay announced it had purchased another UK healthcare provider, Elysium Healthcare, for $1.4bn.
The deal was funded by debt.
Ramsay said the acquisition valued the business at 13.5 times its earnings before interest, tax, depreciation and amortisation and was expected to deliver earnings accretion in the mid-single digits.
The company promoted the transaction as one that would offer Ramsay a platform for growth, as an independent operator of long-term medium and low-secure hospitals and complex care homes for people with mental health conditions.
Elysium has a strong partnership with the National Health Service.
Ramsay shares fell 65c to $68.85 on Monday.
Ramsay is known to have been keen to expand in the British market, with a $1.4bn equity raising in April last year thought to be a war chest for mergers and acquisitions.
It considered buying Icon Group in Australia but Britain has always been seen as its core focus, given the UK offers the best opportunity for growth.
Priory is Britain’s largest mental health provider with 361 centres throughout the country, but it is known for its flagship Roehampton hospital in London, where rich and famous patients receive treatment at its addiction clinic. The clinic has treated the likes of Amy Winehouse, Kate Moss, Johnny Depp and Robbie Williams.
Ramsay has its roots in mental health services, being the largest provider of mental health services in Australia.
It tried to buy British group Spire Healthcare for $3.7bn but the acquisition was blocked by the target’s shareholders.
More Coverage
Coal price not right as Kestrel mine owners seek $4.8bn pay dirt
The owners of the Kestrel coal mine will have to convince buyers to pay about $4.8bn for the mine, but the coal price has fallen about 20 per cent since it was first set to hit the market.
St John of God in discussions over Healthscope leases
The not-for-profit St John of God Health Care has discussed with Healthco Healthcare and Wellness REIT taking over some real estate leases from tenant Healthscope.