The Ramsay Health Care Limited (ASX: RHC) share price is up after increasing the bid for Spire Healthcare (LSE: SPI).
Ramsay’s increased bid for Spire
On 26 May 2021, Ramsay announced it had reached agreement with Spire Healthcare‘s board on the terms of a recommended cash offer to buy the entire business.
Today, Ramsay has increased its cash offer to acquire the whole business at 250 pence per share in cash. This final offer prices Spire at £1.04 billion, or £2.105 billion on an enterprise value basis.
This revised offer represents a premium of approximately 30% for the closing Spire share price on 25 May 2021. It also represents a premium of 54% to the volume weighted average Spire share price over the 180 days ending 25 May 0221.
Management comments
Managing Director Craig McNally said:
“We are confident that our 250 pence cash offer per Spire share, which was reached after extensive negotiations with the Spire board, is fair and reasonable. It is therefore our best and final offer.
“We have been operating in the UK market for 15 years and as such have strong operational insight and a good appreciation of the industry dynamics and long term outlook for the market. We have called on this deep understanding to determine what we believe is a full and fair price for the Spire business.
“Ramsay has an established reputation for delivering high quality patient care and outcomes in the UK which we are committed to continuing. The proposed acquisition of Spire enables us to build a broader platform from which to continue to deliver best in class healthcare and lead the way on patient outcomes, through bolstered partnerships with private health insurers, the NHS, our doctors clinicians and associated clinical networks.”
Summary thoughts on Ramsay and the share price
This offer will hopefully be enough for Ramsay to get across the line, up from 240 pence per share.
Ramsay believes the acquisition will be transformational for its UK business, diversifying the UK’s payor sources and case mix, expanding the geographic reach of its capabilities and improving its capacity utilisation.
It also provides the foundation for further growth as a larger private health care services provider in the UK.
Whilst it’s expecting to help profit from procurement savings, improve capacity utilisation and ending UK listing costs, I’m not sure that it’s a strong opportunity considering the impacts of COVID-19 and the relatively low growth prospects of the business.
