ferret's stock to watch: ramsay health care ltd

Ferret's Stock to Watch: RAMSAY HEALTH CARE LIMITED
08:10, Friday, 15 April 2005

A COMPANY AIMS TO BE BIGGEST AND BEST IN HEALTH CARE

Sydney - Friday - April 15: (RWE Aust Business News)
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OVERVIEW
********

Ramsay Health Care (RHC) is shooting to become Australia's
largest private hospital operator.

It's gone for broke in making a bid for Affinity Health's
hospital portfolio to the tune of $1.4 billion, which was the Affinity
float target price, now scuttled.

Ramsay appears to believe the deal is a fait accompli but it has
to get the nod from a lot of interested parties and the ACCC.

Affinity emerged from the sale of the Mayne Group hospitals which
were bought by a management consortium that included private equity
groups CVC Asia and Ironbridge, as well as the government of Singapore
Investment Corporation, for $813 million.

The Ramsay proposal to take out Affinity was flagged by the media
before it was announced to the ASX.

But Ramsay quickly informed the ASX after the story broke in
Sydney Morning Herald.

It said Affinity Healthcare Ltd had been acquired for a total
purchase price of about $1.4 billion.

Affinity currently operates 48 hospitals across metropolitan and
regional Australia and three hospitals in Indonesia.

Pre-acquisition, Ramsay had 42 facilities throughout Australia
including 36 private hospitals, five aged care facilities and one day
surgery.

The Ramsay statement said the acquisition of Affinity provides it
with a unique opportunity to expand significantly in its core private
hospital business through one transaction, and allows Ramsay to apply its
successful hospital management expertise across a greater number of
facilities for the benefit of its shareholders, doctors, patients and
employees.

Simultaneously, Ramsay has entered into a non-binding Heads of
Agreement to divest 14 hospitals for net proceeds of $406 million to
certain of the current owners of Affinity, being CVC Asia Pacific and
Ironbridge Capital.

The acquisition of Affinity represents a company-transforming
transaction for Ramsay and will create Australia's largest private
hospital company.

The addition of Affinity's hospitals provides a unique
opportunity to expand significantly through one transaction and apply
Ramsay's successful hospital management expertise across a greater number
of facilities.

SHARE PRICE MOVEMENTS
*********************

Shares of Ramsay yesterday remained suspended at $7.30. Rolling
high for the year has been $7.94 and low $5.01. Dividend is 18.5c a share
to yield 2.53 per cent.

Ramsay yesterday requested a trading halt to finalise the
acquisition. It will undertake the institutional entitlement offer over
April 14-15 and the institutional placement and bookbuild for renounced
institutional entitlements on April 18.

The company expects the trading halt to be lifted before the
start of trading on Tuesday April 19.

Ramsay managing director Pat Grier said the acquisition will
create significant value for Ramsay shareholders.

"Operating private hospitals is our core business and what we do
well," Mr Grier said.

"The acquisition of Affinity significantly increases our presence
in the private hospital sector where we have a proven track record of
profitable growth and creating value for our shareholders.

"Importantly, the acquisition will allow us to take advantage of
continuing strong demand for quality hospital services, underpinned by
underlying positive demographic trends and supportive government
policies.

"We intend to apply our proven management and systems to improve
Affinity margins closer to those achieved by Ramsay and to realise
significant cost and revenue synergies through the integration process,"
Mr Grier declares.

The acquisition is expected to be neutral to mildly accretive to
core EPS in FY 2006 and accretive to core EPS in FY 2007 and beyond.

Directors are confident that Ramsay's existing businesses will
continue to perform well and show strong growth in accordance with the
company's guidance of growth in core net profit (pre amortisation of
goodwill and non-recurring items) in excess of 10 per cent for FY 2005.

The acquisition will be funded through an institutional share
placement, a 1-for-9 accelerated renounceable entitlement offer of shares
to Ramsay shareholders, a preference share offer of convertible
adjustable rate equity securities and bank debt.

The offer is subject to shareholder approval at an extraordinary
general meeting which is expected to be held in May.

The company's major shareholder, Paul Ramsay Holdings Pty Ltd,
will vote in favour.

ACCC TO EXAMINE DEAL
********************

The Australian Competition and Consumer Commission will examine
the competition effects of an acquisition by Ramsay Health Care of
Affinity Health's private hospital network.

"The ACCC has not made a decision to clear the transaction and is
yet to undertake its market inquiries," ACCC chairman Graeme Samuel said.

"However, to facilitate the transaction and to enable it to
proceed, Ramsay and Affinity have provided undertakings to the ACCC.

"These will preserve the Affinity business as a separate and
independently viable going concern until such time as the ACCC has
completed its inquiries.

"Ramsay and Affinity have also undertaken to divest 14 hospitals
in New South Wales, Victoria, Queensland and Western Australia back to
some of the current investors in Affinity," the chairman pointed out.

BACKGROUND
**********

Ramsay Health Care was established in 1964 and has grown to
become one of the largest private hospital operators in the country.

It has a high quality portfolio of hospitals and an excellent
record in hospital management and patient care, features that combine to
attract Australia's leading practitioners.

Ramsay's current facilities are located throughout Australia,
including the Coffs Harbour Day Surgery, the management of Mildura Base
Hospital and North Eastern Community Hospital.

With over 4,000 beds, Ramsay Health Care employs more than 7,000
people and caters to the health needs of more than 300,000 patients each
year.

The company has high quality staff, excellent relationships with
doctors, and a commitment to improvement in all areas and its vision for
the future.

The culture of innovative, customer-focused care and service has
established the company as one of the best private health care providers
in Australia.

All of Ramsay hospitals have achieved full accreditation with the
Australian Council on Healthcare Standards.

ENDS

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I don't hold RHC