Ramsay Health Care pops up in $500 million-plus Cura auction

afr.com:

Australia’s biggest private hospital operator, Ramsay Health Care, has lobbed a first-round offer for Cura Day Hospitals, put up for sale by Citi in May, Street Talk can reveal.

Cura makes $40 million a year at the earnings line and is slated to fetch a $500 million-plus price tag for owner Frankfurt-listed healthcare giant Fresenius Medical Care.

Sources said Ramsay – which has a market value of almost $12 billion and 74 hospitals and clinics around the country – submitted a non-binding indicative bid to sellside adviser Citi earlier this month.

Ramsay Health Care chief executive Carmel Monaghan speaks at the AFR Workforce Summit in Sydney. Michael Quelch

The healthcare giant is expected to be shortlisted through to the next stage of the auction which has attracted interest from private equity firms and core-plus infrastructure funds. Ramsay declined to comment on Monday.

Sources cautioned there was no certainty Ramsay’s indicative bid would progress to a binding offer, nor that a signed deal would materialise. Still, the company has deep pockets and is viewed as a heavyweight contender in the auction. Ramsay had cash on hand of $656.1 million at the end of financial year 2023 and $558.7 million in free cash flow.

But capacity to make acquisitions doesn’t equal investor support. Given Ramsay’s share price cash has crashed 39.75 per cent since a peak of $84.37 in late April 2022, miles away from KKR’s bid of $88 cash per share, shareholders may want management to focus on righting the ship. Ramsay has also commenced the sale of its Asia joint venture business Sime Darby Berhad and is gearing up for its AGM at the end of November.

Shares hit a nine-year low of $48.42 on August 25 and were last trading around $50.85.

Cura