RHC and KKR finally parted ways yesterday after a drawn-out process of 15 months that lined the pockets of many financial bankers but alas not shareholders like ourselves:
- The RHC board refused to take an alternative to the original $88 all cash bid by KKR although smaller shareholders like most subscribers would still have received $88.
- Overall our sympathies lie with the suitor KKR as they were unable to gain access to Ramsay Santes books and RHC itself delivered a lacklustre FY report late last month including small downgrades into 2023 & 2024.
- The alternative of $78.20 + 0.22 Ramsay Sante shares was still significantly higher than yesterday’s $62.94 close and one the vast majority of shareholders would have embraced.
If we believe the press it was an acrimonious parting with both parties blaming each other and shareholders missing out again! At this stage, there appears to be no alternative to the RHC board which is frustrating as a shareholder because there was undoubtedly an enthusiastic buyer at the table over a year ago at share price levels not seen ever before.
Our first reaction yesterday was to average the position but with stocks that have delivered strong earnings in the recent reporting season pulling back in a weak market, we feel better value alternatives lie elsewhere. Clearly, there’s some definitive value in RHC significantly above yesterday’s close, KKR are not a dumb operator by any stretch, but it may take some time for this to be realised and more patience now looks required than over recent months. All is not lost and we’re happy to stay long for now but we don’t feel its prudent to increase our exposure.
- “The correspondence stated that should the Ramsay board be willing to reset valuation expectations and consider a new proposal the KKR consortium would move quickly to discuss mutually acceptable terms.”
The Ramsay board is apparently yet to consider this olive branch which we find perplexing in such a dynamic and important situation – the share register appears to be keen sellers let’s hope the board recognise this.
MM is not considering averaging our position at this stage
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