Ramsay makes €661m bid for pan-European Capio

Ramsay Health Care has launched an unsolicited takeover bid for pan European healthcare company Capio AB.

The offer, made through its its 50.9% owned French subsidiary, Ramsay Générale de Santé (RGdS), of SEK 48.5 per share values Capio’s equity at €661m.

RGdS plans to fund the offer through a combination of debt and equity. As well securing an incremental debt facility with leading financial institutions, it said it would undertake a rights issue of approximately €510m should the offer proceed. Ramsay has given an irrevocable commitment to subscribe for its €257m pro rata share of the RGdS equity raising, which will be debt funded.

Nasdaq Stockholm listed Capio AB (Capio) operates in Sweden, Denmark, Norway, Germany and France, and reported sales of around €1.6bn with EBITDA of €116m in 2017.

The proposed takeover is expected to result in pre-tax synergies of approximately €20m, the majority of which will be realised within two to three years.

Ramsay CEO and RGdS chairman Craig McNally said: ‘Capio has a strong portfolio of healthcare facilities in Europe and is a good strategic fit for RGdS. The combined group would be uniquely positioned in the private European healthcare sector with a geographic footprint spanning six countries with strong underlying growth fundamentals, and would further contribute to making Ramsay a leading global provider of healthcare services.

‘Capio has a number of high performing businesses and maintains a strong position particularly in its Nordic markets where it operates hospitals, specialist clinics and primary care units. The company has been a leader in driving value-based healthcare, digitalisation and has also been at the forefront in the delivery of elective care in specialised clinic settings, which is something we could leverage in our other markets. We would look forward to sharing our respective capabilities towards global quality and operational best practices.

‘Importantly, this transaction would be financially compelling, providing the opportunity for substantial synergies for RGdS as well as further acceleration of our growth strategy and is expected to be core EPS accretive for Ramsay within two to three years.’

Capio exited the UK hospital business in 2007, selling its 22-strong portfolio to Ramsay for £193m. In subsequent years, it successfully grew the business through a focus operational efficiencies and the growing NHS market, which now accounts for roughly 70% of its activity. However, in June Ramsay was slashed its earnings guidance following weak performance as the NHS continues to implement demand management strategies.

The unsolicited offer has yet to be considered by the Board of Capio, which may decide not to recommend acceptance of the offer by its shareholders. It is expected that an offer document will be published in early September 2018.