That means the biggest takeover of the year is on the line,
KKR’s alternative proposal
Ramsay unveiled the terms of KKR’s alternative proposal on Thursday evening, as the hospital group and its French company Ramsay Santé prepared to release earnings updates to investors.
KKR’s alternative proposal would see all Ramsay shareholders pay $78.20 in cash for Ramsay’s Australian operations, before getting cash or certificates for Sante’s stake.
Small Ramsay plot holders — those holding 5,000 shares or less, which is by far the majority of investors in the group by number — would receive $88 in cash, while those holding more than 5,000 shares would receive shares health.
The aggregate cash/scrip offer price — for those holding more than 5,000 shares — was $84.93 Thursday night, which wasn’t high enough for Ramsay’s board.
While both parties, after months of walking the garden path, want to keep talking, a pretty clear and fundamental gap in their expectations has emerged.
Ramsay’s board clings to the all-cash, $88-per-share structure that allowed KKR to be diligent in the first place.
KKR, having been unable to obtain Sante’s diligence, moved on and withdrew that offer. He wants to talk about the alternative proposal.
Ramsay’s revelation on Thursday evening and KKR’s letter on Friday morning should put a tipping point in a situation that has been brewing for five months.
Sante, despite only being around a tenth of Ramsay’s value, was always going to be the potential stumbling block.
KKR owns a stake in Elsan, the other major French hospital group, while Sante has determined directors who were never going to let the co-owner of Elsan do their due diligence without certain assurances.
KKR would have known. Ramsay, who has representatives on the Sante board, certainly knew that.
The question is why it took five months for it to finally emerge as a battleground, and why both sides let it go this long without a solution they could both live on.
Hedge funds are hoping KKR can come back with a higher cash component in the alternative proposal, which could break the deadlock and win Ramsay’s approval.
UBS and Goldman Sachs advise Ramsay, while KKR’s advisers are Barrenjoey Capital Partners and Credit Suisse.
Ramsay shares last traded at $72.92.
It came as Ramsay returned his Exercise 22 results on Friday morning. It announced revenue down 3% to $13.75 billion and EBITDA down 10% to $1.83 billion.