By Scott Murdoch, Harish Sridharan and Anshuman Daga
(Reuters) -A group led by KKR & Co (NYSE:KKR) made an unsolicited near-$15 billion bid for Ramsay Health Care Ltd on Wednesday, underlining buyout funds' appetite for healthcare assets and pushing the Australian company's shares by up as much as 30%.
If successful, the takeover would rank as the biggest private equity-backed buyout of an Australian company, and would be the biggest deal in Australia this year, nearly doubling activity, Refinitiv data shows.
Ramsay said in a statement it would provide the KKR-led group with due diligence on a non-exclusive basis and talks were at a preliminary stage.
The deal would represent a substantial return for the Paul Ramsay Foundation (PRF), Ramsay's biggest shareholder with an 18.8% stake, which said it would support the offer.
"Assessment of any conditional indicative offer is up to the board of Ramsay Health Care. However, should an offer materialise along the lines canvassed in Ramsay Health Care's ASX Announcement, PRF would support such an offer being put to shareholders," it said.
Australian pension fund HESTA and sovereign fund Abu Dhabi Investment Authority are participants in the consortium, according to a source with direct knowledge of the matter. The person declined to be named as the firms' involvement was not public.
HESTA did not respond to a request for comment and the Abu Dhabi fund declined to comment.
The non-binding proposal comes as record-low interest rates prompt cash-rich private equity firms, superannuation and pension funds to invest in healthcare and infrastructure assets.
The A$88 cash per share proposal, worth A$20.05 billion ($14.8 billion) in total, represents a nearly 37% premium to Ramsay's Tuesday closing price of A$64.40. The enterprise value of the deal is A$28 billion, sources said.
The offer sent the shares up by as much as 30% to A$83.55, the highest in nearly six years, and their biggest intraday jump to date, before paring gains to close up 24% at A$80.
"The 31.3% premium to Ramsay's price over the last six months is reasonable for a change of control," said Brian Freitas, an analyst who publishes on research platform Smartkarma.
"The share offer implies a forward earnings multiple of 33 times versus an average of 17 times for its peers, so shareholders should be fine with the proposed offer price."
Ramsay has reviewed the proposal with its advisers and said it is seeking information from the consortium regarding its funding and structure of the deal.
KKR did not respond to a request for comment.
Refinitiv data shows total deal value of $17.4 billion in Australia so far this year, with a 41% slump in the first quarter from a year earlier. The country saw a flurry of blockbuster takeovers in the last year, including the purchase of Sydney Airport and Block Inc's takeover of buy-now-pay-later star Afterpay.
The COVID-19 pandemic has weighed on healthcare operators including Ramsay, with the shutdown of non-urgent surgeries, staffing shortages due to isolation regulations, and upward wage pressure weighing on earnings.
Last year , Australian biopharmaceutical giant CSL (OTC:CSLLY) Ltd announced a $11.7 billion offer for Swiss drugmaker Vifor Pharma AG.
Ramsay operates hospitals and clinics across 10 countries in three continents, with a network of more than 530 locations. It has 72 private hospitals and day surgery units in Australia and operates clinics and primary care units in about 350 locations across six countries in Europe.
Started by Paul Ramsay in 1964 by converting a Sydney guest house into one of the country's first psychiatric hospitals, the Paul Ramsay Foundation sold nearly 11% of Ramsay in 2019 for A$61.80 per share.
KKR owns French healthcare group Elsan.
Ramsay said it was still pursuing a $1.35 billion buyout offer it had received previously from IHH Healthcare Bhd for its Asia joint venture with Malaysia's Sime Darby Holdings.
Ramsay has hired UBS and Herbert Smith Freehills as financial and legal advisers, respectively, for the KKR-led consortium's proposal. KKR is advised by Barrenjoey Capital and Credit Suisse (SIX:CSGN), sources said.
($1 = 1.3535 Australian dollars)