Shares of R1 RCM soared nearly 30% in early trading on Monday following a significant bid from its largest investor to acquire the remaining stake in the company at a valuation exceeding $5.7 billion.
Elevating Offer
New Mountain Capital, a private-equity firm holding over 32% of R1, proposed a buyout price of $13.75 per share in cash, representing a notable 24% premium over the previous day’s closing price of $11.10 for the Murray, Utah-based company.
Market Response
R1’s shares quickly rose to $14.23 as investor interest peaked with an increase of more than 28%.
Potential Takeover
New Mountain divulged discussions with TCP-ASC, an investment entity jointly owned by Ascension Health Alliance and investment funds linked with TowerBrook Capital Partners, regarding a potential acquisition of RCM. Notably, TowerBrook maintains nearly 30% ownership in RCM as per FactSet data.
Analyst Predictions
Analyzing the situation, Citi analysts Daniel Grosslight and Luismario Higuera suggested that New Mountain’s offer might initiate a bidding war resulting in valuations ranging between $15 to $20 per share for R1. They anticipate R1 sealing a deal amidst the competitive environment.
