Ramsay (ASX: RHC) announces trading halt after receiving ‘inferior’ proposal from KKR

• Ramsay shares are on trading halt until notified by the company.
• Today the healthcare company has announced its FY22 results.
• Sources say that KKR has withdrawn AU$88 all-cash proposal for Ramsay 

On Friday (26 August 2022), Ramsay investors were taken by surprise after the company announced the sudden trading halt of its securities on the ASX. Today, the ASX-listed healthcare company Ramsay Health Care Limited (ASX: RHC) also announced its FY22 results and broke its almost four-month-long silence on its deal with KKR & Co, disclosing an alternate proposal by the bidder. Noticeably, just a few hours after the company released its results, it went into a trading halt. 

Sources believe that this morning Ramsay received a letter from KKR stating that it is no longer offering AU$88 per share on a whole-of-company as per its initial April valuing Ramsay at approximately AU$28B, including debt.  

About the offer:

On 20 April 2022, Ramsay received a nonbinding, indicative and conditional offer from a consortium of investors spearheaded by KKR to buy all the Ramsay shares through a scheme of arrangement at AU$88.00 cash per share.

Alternate offer:

On Thursday (25 August 2022), Ramsay informed that the Consortium also proposed an alternative structure, which is considered inferior. The company informed that it is asked that the Alternative Proposal would require the Consortium buying all the shares in Ramsay via a scheme of the arrangement, with the Consortium retaining a 15.0% interest in Ramsay Santé. This includes Ramsay shareholders getting Ramsay’s shareholding balance in Ramsay Santé as part consideration. 

Ramsay Santé is listed on Euronext and Ramsay owns a 52.8% interest in Ramsay Santé.

The company informed that as per Ramsay Santé closing price on 24 August this year, the implied value of the consideration for holdings exceeding 5,000 shares under the Alternate offer is AU$84.931 for each Ramsay share, less dividends declared or paid post 31 January 2022.

The company has considered this Alternative Proposal meaningfully ‘inferior’ in view of the lower implied value compared to the all-cash proposal, structural challenges, complexity with respect to execution, and the reduced liquidity of Ramsay Santé shares. 

Ramsay’s FY22 results:

• Non-recurring items had a negative impact on EBIT of AU$60.1m compared to a negative impact of AU$34.2m in the pcp. 
• A final fully franked dividend of 48.5cps was determined taking the full year dividend to 97.0cps.
• Ramsay & Sime Darby Berhad are looking for a potential sale of Ramsay Sime Darby Health Care Sdn Bhd (joint venture).
• Total revenue & other income grew 3.1% on the pcp
• Capital expenditure for the period was AU$733.4m compared to AU$674m in the pcp
• A fully franked dividend of 48.5 cents per share (cps) has been determined taking the full year dividend to 97.0 cps.

It is yet to be seen whether the two companies reach a fair deal in due course of time. Meanwhile, Ramsay’s shares will be on a trading halt on ASX until further notified by the company.

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