The Ramsay Health Care Limited (ASX: RHC) share price is pushing higher on Wednesday morning.
At the time of writing, the private hospital operator’s shares are up almost 1% to $67.99.
Why is the Ramsay share price rising?
Investors have been buying Ramsay’s shares today following speculation that it is looking to make a major acquisition in the Australian healthcare market.
On Tuesday evevning, the AFR was reporting that Ramsay is teaming up with private equity firm Pacific Equity Partners to acquire rival private hospital operator Healthe Care.
Healthe Care is the third largest private hospital operator in Australia. It employs 7,000 people across Australia and in New Zealand and operates a portfolio of 34 private healthcare facilities.
However, while Ramsay and Pacific Equity Partners are believed to be teaming up on the acquisition, they are not expected to own the hospitals together.
Instead, it is understood that Ramsay will acquire as much of Healthe Care’s portfolio as the ACCC allows, with Pacific Equity Partners snapping up the rest of the hospitals.
Surprisingly, Ramsay has not responded to the report. However, the speculation does make a lot of sense given that Healthe Care’s owner, China’s Luye Medical Group, is currently in the process of offloading these assets.
The report indicates that Luye Medical Group hired JPMorgan to auction them off, with the first round bids being made last week. Sources have told the media outlet that the auction will now move to a second and binding bid phase in coming weeks.
Healthe Care is estimated to be generating approximately $1 billion in revenue per year at present. Depending on how many of its operations Ramsay acquires, it has the potential to give its Australian revenues a nice lift in FY 2022 and beyond. Ramsay recorded revenue of $2.7 billion in Australia during the first half of FY 2021.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post Ramsay (ASX:RHC) share price rises on acquisition speculation appeared first on The Motley Fool Australia.
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