Why is RHC trading so far below its takeover bid?

Hi Nick,

We got asked a similar question last week because its easy to question why RHC is trading at $71.52, 18.8% below the proposed bid of $88.

Last month private equity heavyweight KKR made a conditional $88 bid for Ramsay Healthcare (RHC) with some due diligence still needed especially towards its French operations. At this stage KKR & Co. has begun seeking investors to buy Ramsay Health Care Ltd.’s A$8 billion ($5.8 billion) real estate assets.

The talk in the market is the private equity group and its partners have sent out terms for a sale-and-leaseback agreement including Ramsay’s 72 hospital sites.  In the current extremely volatile market nerves have clearly crept into the RHC share price that tightening liquidity might derail the bid hence RHC has fallen from above $84 to ~$71, a significant discount to the takeover bid – MM is watching the current pullback with great interest.

For now, the bid is still in play but investors are clearly nervous that the recent lack of liquidity could derail the bid by KKR.