No deal? Here’s why the Ramsay share price is on ice

The Ramsay Health Care Limited (ASX: RHC) share price is in the freezer on Tuesday amid rumours its suitor has scrapped its takeover approach.  

The company granted a consortium led by KKR due diligence following an $88 per share takeover bid in April.

However, KKR ran into difficulties when it tried to open the books of Ramsay Health’s European subsidiary Ramsay Generale De Santé SA (EPA: GDS). As a result, the consortium withdrew its offer, replacing it with one the company dubbed “meaningfully inferior”.

The Ramsay Health share price is halted at $70.21 this morning as the company prepares to release an announcement.

The update is expected to outline the withdrawal of KKR’s offer, according to various media reports.

Let’s take a closer look at what’s going on with the S&P/ASX 200 Index (ASX: XJO) healthcare giant on Tuesday.

Is this why the Ramsay share price is frozen?

The Ramsay Health share price isn’t going anywhere just yet as the company gears up to release an announcement to the ASX.

The stock has been put into a trading halt amid reports the company and its suitor have reached an impasse. In response, KKR has binned its bid entirely, the Australian Financial Review reports.

The consortium withdrew its $88 per share cash offer last month. Instead, it offered $88 per share in cash for the first 5,000 Ramsay Health shares held by an investor and $78.20 and 0.22 Ramsay Santé shares for each share thereafter. The part-scrip offer represents a valuation of $85.93 per share.

The company had previously indicated that around 18% of its shares would likely receive the cash offer while approximately 82% of shares would be eligible for the part-scrip consideration.

The Ramsay Health board refused the new offer but left the door open for the consortium to post another bid.

However, according to the masthead, KKR and its partners believe the business has deteriorated since it posted its initial bid.

Additionally, the consortium was disappointed by the company’s latest results, The Australian reports.

The Ramsay Health share price has fallen 2.3% year to date and 12.3% since the initial takeover bid was announced. Though, it’s trading 2.3% higher than it was this time last year.

For comparison, the ASX 200 has fallen 8% year to date and 6% over the last 12 months.

The post No deal? Here’s why the Ramsay share price is on ice appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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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