Ramsay Healthcare digests Spire acquisition

Sources say that the acquisition that will offer Ramsay 25 per cent of the private hospital market in the UK will likely take about 18 months to bed down.

The $3.7 billion acquisition by Ramsay Healthcare of the London-listed Spire Healthcare Group is likely to see the country’s largest private hospital operator take less of an active role in the major upcoming sales processes for groups like the $2 billion Icon Group, say market experts.

Sources say that the acquisition that will offer Ramsay 25 per cent of the private hospital market in the UK will likely take about 18 months to bed down.

However, as a result of the deal, divestments may now be on the agenda for Ramsay rather than acquisitions, after it told investors on Wednesday that it would look to pay for the deal through debt, but also look at other measures that could include a strategic portfolio review of assets.

Exactly what the group may offload is not yet entirely clear.

Earlier, Ramsay was tipped as a strong candidate in the running to buy Australia’s largest dedicated cancer care provider Icon Group, which is set to hit the market next month through Jefferies and Goldman Sachs with a price tag of at least $2 billion.

Now the thinking is that an infrastructure group is more likely to be an acquirer of the business for which promotional material is set to hit the desks of prospective suitors towards the end of June.

Icon was sold by Quadrant Private Equity in 2017 to a consortium including the Queensland Investment Corp, Goldman Sachs Private Equity and China’s Pagoda Investments for $1.2 billion.

It has also been on the fringes of the contest to buy Healthe Care’s acute care hospitals in a sales process run by JPMorgan.

The hope for Ramsay has been that it could secure some hospitals as part of a break up scenario of the business owned by China’s Luye.

Final bids are due on Friday, with Crescent Capital and Pacific Equity Partners considered the strongest contenders for the portfolio comprising 12 Australian acute care hospitals and a handful of day centres.

It is understood that Brookfield, which controls private hospital owner Healthscope, is planning to team up with not-for profit groups to contend for the portfolio, as it also remains keen to participate in a break up play.

Not for profit groups that are understood to have been around the process earlier on include the Catholic organisations St John of God and Calvary Health Care.

One contentious point remains the $450 million to $500 million price tag for the Healthe Care sale and the various rental agreements on all of the separate hospital sites with different landlords.

Meanwhile, Ramsay’s announced buyout proposal of Spire on Wednesday at 240 pence per share, or £2.06 billion, comes as no major surprise, with talk for some time that the company has been looking to strengthen its presence in the UK and Europe.