Private hospital operator Ramsay Health Care Limited (ASX: RHC) has announced that it is in exclusive talks to acquire a majority stake in Generale de Sante – a leading private healthcare services group in France.
Should the acquisition proceed the business (on a consolidated basis) will add revenues of around $2.5 billion to Ramsay’s top line. It will also substantially boost the firm’s exposure to France by about 300%.
It appears that the current majority owners of Generale de Sante are willing to consider Ramsay’s proposal with the group being granted exclusivity to conduct due diligence. Shareholders are expected to be spared from having to reach into their pockets to fund the acquisition which will value Generale de Sante at approximately $1.4 billion and require Ramsay to pay nearly $800 million with management stating it plans to fund the acquisition via debt.
Ramsay is one of the few firms – another is Sonic Healthcare Limited (ASX: SHL) – that possess a truly remarkable record of creating shareholder value through acquisitions. Both healthcare companies have grown through acquisition and both have significant outperformed the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO).
Ramsay’s track record suggests this acquisition is likely to be value creative for shareholders and any share price weakness should be looked on as a buying opportunity.