The Ramsay Health Care Limited (ASX: RHC) share price has exited its short-lived trading halt on news ongoing takeover talks have hit a major hurdle.
The company rejected an alternative proposal put forward by its suitor, a consortium led by KKR, last month. Ramsay said it refused to engage with the "meaningfully inferior" offer but left the door open for KKR to post an improved bid.
The consortium dashed such hopes last night. However, it said it would work quickly to discuss acceptable terms if the company was to reset its valuation expectations.
In today's release, Ramsay said:
As stated [late last month], the Ramsay board considered the alternative proposal and determined not to engage further with the consortium … on these terms.
The Ramsay share price is $62.58 right now, 10.86% lower than its previous close.
The tumble also leaves the stock 29% lower than KKR's original $88 per share bid.
Let's take a closer look at the latest from the S&P/ASX 200 Index (ASX: XJO) private healthcare provider.
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Ramsay share price falls as bidder refuses to budge
The Ramsay share price is deep in the red on Tuesday. It follows news the KKR-led consortium has refused to improve the terms of its recently revised takeover bid.
The consortium was granted due diligence after it posted an $88 per share all-cash bid for Ramsay in April.
However, that offer was withdrawn last month due to difficulties completing due diligence on the company's subsidiary Ramsay Generale De Santé SA (EPA: GDS).
It was replaced with a proposal that would see the consortium paying $88 per share cash for an investor's first 5,000 securities and $78.20 and 0.22 Ramsay Santé shares for each share thereafter.
The Ramsay board refused the revised bid – said to value Ramsay's shares at $84.93 apiece – instead leaving the door open for a better offer.
But hopes of a higher bid came crashing down in an announcement to the ASX this morning.
Ramsay said the consortium penned a disappointing letter to its board on Monday evening ruling out the possibility of an improved proposal. The company's release continued:
[T]he consortium recognises that further engagement and access to further due diligence may provide some positive visibility, the information provided in the FY22 results implies that there is meaningful downward pressure on the valuation proposed under the alternative proposal.
[S]hould the Ramsay board be willing to reset valuation expectations and consider a new proposal, the consortium would move quickly to discuss mutually acceptable terms.
The company's board hasn't yet considered the latest communication from the consortium. It noted there's no certainty of any additional proposals or that any bid will result in a transaction.
Today's tumble sees the Ramsay share price 13% lower than it was at the start of 2022. For comparison, the ASX 200 has dumped 8% so far this year.
