New Mountain Capital, a private equity firm holding over 32% of R1 RCM (NASDAQ:RCM), reiterated its interest in acquiring the revenue-cycle-management provider, but only as part of a collaborative deal with TCP-ASC, RCM’s other major investor.
R1 previously disclosed that its independent board members' special committee rejected waivers to New Mountain and TCP-ASC’s investment agreements and halted any joint deal discussions between them.
Despite no further discussions with TCP-ASC, New Mountain reaffirmed its interest in a joint bid, emphasizing the shared knowledge of R1’s operations and customer base between the two major shareholders.
New Mountain had previously proposed a buyout at $13.75 per share, valuing R1 at approximately $5.7 billion.
TCP-ASC owns nearly 36% of R1 and is co-owned by Ascension Health Alliance and TowerBrook Capital Partners' investment funds.
“While we already expected this had to be the case (under current ownership circumstances), we believe NM is posturing to reiterate the urgency of their proposal and discourage any potential comp bids,” analysts at Jefferies said in a note.
“We are republishing our LBO model, which estimates that $15 (a 20%+ takeout premium) would be a reasonable price for RCM to be acquired. Our model suggests the acquirers could generate a healthy ~20% IRR over a 5- year period at this level,” they added.
RCM shares jumped over 1% in Monday trading.