KKR-led group cans $15 billion all-cash bid for Australia's Ramsay, proposes alternative

(Reuters) -Ramsay Health Care Ltd said on Friday a group led by private equity giant KKR & Co pulled the plug on a near $15 billion all-cash buyout offer for the Australian hospital operator, but a cash and stock bid remains on the table.

FILE PHOTO: Trading information for KKR & Co is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 23, 2018. REUTERS/Brendan McDermid

On Thursday, Ramsay received an alternate proposal from the KKR-led consortium in that its shareholders would be entitled to receive A$88 per share offer – as in the scrapped all-cash proposal – but only for the first 5,000 shares.

For investors with larger stakes, the offer would be split into A$78.20 per Ramsay share and 0.22 Ramsay Sante share, its French subsidiary. The new offer is valued at about $14.5 billion.

Ramsay said KKR had informed it the all-cash offer had been withdrawn, and that it had rejected the alternative, which it called “meaningfully inferior”. Its shares fell 4.5% when trade resumed on Friday.

Ramsay operates healthcare facilities in over 530 locations across 10 countries, including over 70 private hospitals and day surgery units in Australia.

In a statement, the firm said it would not negotiate with the KKR-led consortium and its advisors on the alternative proposal but was willing to engage with them.

“Ramsay is prepared to engage with the Consortium to determine whether it can put forward an improved binding proposal that is capable of recommendation by the Ramsay Board,” it said.

The decision to walk away from the cash offer was made after KKR and its advisors could not carry out due diligence on Ramsay Sante, said two people with direct knowledge of the matter, who declined to be identified as the information was private.

The alternative proposal was made to Ramsay’s board in mid-June, one of the people said.

Ramsay did not immediately respond to a request for comment on when the proposal was received. KKR declined to comment.

Ramsay on Friday reported full-year net profit after tax of A$274 million, down nearly 40% on the prior corresponding period.

The KKR-led consortium, which also consists of Australian pension fund HESTA plus Abu Dhabi Investment Authority (ADIA), made the first bid in April but had made little progress since.

Ramsay owns 52.8% of Paris-based Ramsay Sante. The alternate KKR offer would give the consortium a 15% stake in the French hospital operator and Ramsay shareholders would retain the balance of that stake. KKR owns French healthcare group Elsan.

Had it been successful, the cash offer would ranked as the biggest private equity-backed buyout of an Australian company, Refinitiv data showed.

($1 = 1.4362 Australian dollars)

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