This morning, Australian investors will have an opportunity to react to news that Ramsay Health Care Limited (ASX: RHC) and its European business plans to buy Capio AB.
On Friday, after the ASX’s close, Australia’s leading private hospital owner announced its 50.9%-owned French subsidiary, Ramsay Générale de Santé (RGdS), will buy Capio AB for an equity valuation of EUR 661 million ($1.04 billion).
The Capio Group is a Swedish healthcare business with operations in Denmark, Norway, Germany and France. Capio shares are listed on the NASDAQ Stockholm exchange. Its shares jumped 27% on Friday following the news.
“Capio has a strong portfolio of healthcare facilities in Europe and is a good strategic fit for RGdS,” Ramsay CEO Craig McNally said. “The combined group would be uniquely positioned in the private European healthcare sector with a geographic footprint spanning six countries with strong underlying growth fundamentals, and would further contribute to making Ramsay a leading global provider of healthcare services.”
Ramsay’s RGdS plans to fund the deal using debt backed by leading institutions and will sell new shares to investors to raise EUR510 million ($802 million). Ramsay has agreed to take up all of its rights to buy shares in RGdS, worth EUR 257 ($404 million).
Ramsay, which has operations throughout Europe, believes the deal will be financially compelling and produce synergies for RGdS. “Importantly, this transaction would be financially compelling, providing the opportunity for substantial synergies for RGdS as well as further acceleration of our growth strategy and is expected to be core EPS accretive for Ramsay within two to three years,” McNally added.
The offer is subject to conditions and agreement by the Capio board, Ramsay said.
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