KKR-led $13 billion buyout of Australia’s Ramsay Health collapses
© Reuters. 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., Aug. 23, 2018. REUTERS/Brendan McDermid/File Photo
By Byron Kaye and Harish Sridharan
(Reuters) – A KKR & Co (NYSE:) Inc led group withdrew a A$20 billion ($13 billion) approach for Australian hospital operator Ramsay Health Care after talks hit a stalemate, killing Australia’s biggest deal of the year and sending the target’s shares tumbling.
The decision announced by both sides on Monday draws a line under a takeover saga that has been running since April, and underscores the volatility of dealmaking at a time of heightened disruption of capital markets and operating logistics.
The would-be buyers had proposed paying A$88 per share in cash for the company in April, but cut the cash component in August after Ramsay reported a worse than expected 39% slump in annual profit, blaming COVID-19-related staffing problems.
Central banks around the world meanwhile had jacked up interest rates – and borrowing costs – amid raging inflation.
Then last month Ramsay said the KKR-led group had notified it that it would not improve on what Ramsay considered a “meaningfully inferior” offer, due to the target company’s weak business performance.
Ramsay said in a sharemarket filing on Monday that it had continued to engage with the potential buyers but “it has become apparent that the consortium is unable to provide a new proposal at this time”.
A spokesperson for the KKR-led consortium told Reuters in a statement: “Following recent engagement with the Ramsay Board, we have decided to mutually terminate discussions regarding a potential change of control transaction”.
Shares of Ramsay fell as much as 7% in morning trading, against a 2% decline on the broader market, as any remaining hopes a deal might eventuate evaporated. The stock was last trading at A$57.64, one-third below the initial indicative buyout price which Ramsay’s biggest shareholder had supported.
On Friday, another of Australia’s biggest planned deals of the year, a purchase of legal software company Link Administration Holdings by Canadian rival Dye & Durham, collapsed due to a regulatory probe of the target’s British unit.
($1 = 1.5328 Australian dollars)