KKR-led buyout officially ends after Ramsay Health Care shares slide

What would have been Australia’s biggest bid of the year, a $20 billion offer from a US private equity group to buy out Ramsay Health Care, has officially collapsed after hitting a stalemate.

A consortium led by US private equity group Kohlberg Kravis Roberts had offered $20 billion for Ramsay Health Care, Australia’s largest private hospital chain.

The takeover talks, which had been running since April, officially ended after the Australian hospital operator had announced a worse than expected slump in annual profit.

In August, the KKR-led group backed away from its original $88-per-share offer after Ramsay’s 2021/22 results showed a 21 per cent drop in earnings, to $891.2 million.

Ramsay attributed the decline to COVID-19-related staffing problems.

While the consortium had put forward a lower-value deal using a different structure in late August, the Ramsay board considered it a “meaningfully inferior” offer.

According to Reuters’ sources, one of the reasons for the revised bid was that the KKR had been unable to gain access to Ramsay Sante’s accounts to carry out due diligence.

There had been further talks lately but the ASX50 component said in a statement to the ASX on Monday that the consortium wasn’t able to provide a new proposal at this time.

“While the Ramsay Board remains open to engaging in relation to a change of control proposal that provides appropriate value for shareholders and has sufficient certainty of completion in a reasonable timeframe, it is apparent that this is unlikely to be forthcoming in the near future,” Ramsay said in a statement.

“The Ramsay Board and the Consortium have mutually agreed to terminate discussions.”

Ramsay owns 73 private hospitals, clinics and day surgery units in Australia, admitting more than 1 million patients and employing 31,000 people. It operates in nine other countries.

At 1.51pm AEST, 26 September 2022, Ramsay shares were down 2.5 per cent to $58.99.

With news from AAP. Content has been edited for style and length.