Even though it had been flagged last month, the market still liked the look of Ramsay Health Care’s (RHC) latest move into the European hospital market.
The shares rose 1.3% to $45.14, on a day when the market was down around 0.4%.
Ramsay’s latest move had been revealed on May 12 when the vendor, Italy’s DeA Capital SpA, said a joint venture of Ramsay and Credit Agricole Assurances – the insurance arm of bank Credit Agricole SA – had bid 16.75 euros a share for 83.43% of the company.
Yesterday it confirmed it was going ahead with the purchase of the majority stake in Generale de Sante SA, a major French private hospital operator, in a deal valuing its French counterpart at 945 million euros ($1.29 billion).
The purchase will make Ramsay France’s largest private hospital operator, with 101 hospitals and 15,400 beds.
Ramsay and its joint venture partner have now signed a contract for the purchase.
Ramsay said it will pay €429 million ($A627 million) for 57% of the shares in the French company – the same percentage it holds in its Ramsay Sante venture with Credit Agricole.
The venture partners plan to lift their investment in Generale de Sante, potentially increasing the amount Ramsay will pay to a maximum €515 million through a tender process for the remaining shares. It has annual revenue of approximately €1.7 billion, or around $A2.4 billion.
RHC 1Y – Ramsay moves to expand its French interests
The deal is Ramsay’s fourth acquisition since it bought 57% of French hospital operator Groupe Proclif in 2010.
Generale de Sante has 75 healthcare facilities including 61 hospitals, and about 19,000 employees, and will bring Ramsay’s portfolio in France to 115 facilities and 15,400 beds.
Ramsay said yesterday it expects the acquisition to produce an immediate lift to earnings. Ramsay said it intends to debt fund its equity interest in Générale de Santé. On completion, Ramsay will assume board control of Générale de Santé and will consolidate for accounting purposes.
Ramsay Health Care Managing Director Chris Rex said the acquisition of Générale de Santé and the expansion of Ramsay’s French hospital portfolio was a significant development for the company, bringing its total global portfolio to 226 facilities and 25,800 beds and places.
He said the combination of an expanding and aging population which exists in Australia also applies in France and is expected to generate increasing demand for healthcare for many years.
“Since entering the French market in 2010 we have successfully grown the business and developed a comprehensive understanding of the marketplace,” Mr Rex said in yesterday’s statement.
