Could this ASX 200 share be in for a $1.7 billion boost?

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.

S&P/ASX 200 Index (ASX: XJO) listed Ramsay Health Care Ltd (ASX: RHC) is recovering from the two-year lows its share price hit on 26 September.

That low point came after takeover negotiations with a consortium of financial investors led by KKR failed to reach an agreement.

The ASX 200 healthcare share continued to trade lower over the following days. But the company’s share price has rebounded 14% since 28 September. Shares are currently swapping hands for $64.26 apiece.

Some of that lift may be driven by speculation that Ramsay could be planning to sell a goodly portion of its property assets alongside its stake in European hospital operator Ramsay Sante.

A possible $1.7 billion boost for this ASX 200 stock

Citing unnamed sources close to Ramsay, The Australian reports that it understands the ASX 200 healthcare stock is weighing up selling 25% of its real estate assets.

Ramsay Sante, which operates 210 facilities – including primary care units, specialist clinics, and hospitals in Denmark, Norway, Sweden, and Italy – may also be in the mix.

Should Ramsay Healthcare opt to sell its $1.7 billion majority stake in Ramsay Sante and property assets, Macquarie analysts believe the company’s share price could see a healthy boost, improving the stock’s return on invested capital.

According to Macquarie (courtesy of The Australian):

Applying a multiple of 12.5 times earnings before interest, tax, depreciation and amortisation for the Australian business, combined with Ramsay Sante sale proceeds, would provide a valuation of about $72.00, 15 per cent ahead of the current share price.

With some recent gains posted by the ASX 200 healthcare company, a $72.00 valuation represents a 12% premium on the share price at the time of writing.

Ramsay share price snapshot

The Ramsay share price has enjoyed a strong month, up almost 14%. That outpaces the 7% monthly gain posted by the ASX 200.

The post Could this ASX 200 share be in for a $1.7 billion boost? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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