Ramsay Health Care share price on watch amid $14.8bn takeover offer

Ramsay has received a takeover offer…

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Key points

  • Ramsay Health Care has received a takeover approach from a consortium led by KKR
  • The consortium has offered $88.00 per share, which represents a premium of 36.7%
  • Due diligence has been granted but the offer was supposed to be confidential and can be withdrawn now it has leaked

The Ramsay Health Care Limited (ASX: RHC) share price could shoot higher on Wednesday morning.

This follows news that the private hospital operator has received a takeover approach.

Ramsay share price on watch amid takeover approach

The Ramsay Health Care share price will be on watch today after the company confirmed speculation that it has received a takeover approach.

According to the release, Ramsay Health Care has received a conditional, non-binding, indicative proposal from a consortium of investors led by KKR to acquire 100% of the company by way of a scheme of arrangement.

Under the indicative proposal, Ramsay Health Care shareholders would be entitled to receive $88.00 cash per share, less any ordinary or special dividends paid to shareholders. This includes the recently paid ordinary dividend of 48.5 cents per share.

The offer of $88.00 per share represents a premium of 36.7% to the latest Ramsay Health Care share price of $64.39.

In addition, the release explains that shareholders would have the option to receive part of the consideration in unlisted scrip in the consortium holding entity.

Finally, if the scheme of arrangement were implemented, Ramsay Health Care would be permitted to pay a fully franked special dividend to distribute all available franking credits to shareholders. As of 31 December, but prior to its most recent dividend, Ramsay's franking account balance was $823 million.

What now?

The release reveals that having reviewed the proposal, the Ramsay Board of Directors has determined it appropriate to provide the KKR Consortium with due diligence on a non-exclusive basis. This is to explore whether it can put forward a binding proposal that is in the best interests of shareholders.

However, Ramsay Health Care notes that the indicative proposal is subject to a number of conditions.

These include the completion of satisfactory due diligence, no disposal of any of Ramsay's subsidiaries or properties, final approval of the Consortium's investment committee, entry into a scheme implementation deed on customary terms and conditions, regulatory approvals, and shareholder approval.

Furthermore, the release highlights that the KKR wanted the indicative proposal to be confidential and reserved the right to withdraw it in the event it ceased to be confidential. As this has now occurred, it is able to back out without consequence.

The Ramsay Health Care Board will continue to keep the market informed in accordance with its continuous disclosure obligations.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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