New Mountain Capital Terminates Talks with TCP-ASC, R1 RCM Stock Falls

R1 RCM (NASDAQ:RCM) shares fell 9.2% in after-hours trading after New Mountain Capital announced it failed to reach an agreement with TCP-ASC on a joint proposal for a potential acquisition. Despite ongoing discussions, no agreement was reached. New Mountain had previously sought a waiver to make a takeover offer, proposing a bid of $13.25 per share, down from $13.75. The deal, which also included TowerBrook Capital Partners and Ascension Health as equity co-investors, was conditional on a waiver of a standstill agreement.

R1 RCM (NASDAQ:RCM) shares experienced a significant decline of 9.2% in after-hours trading on March 19, following the announcement that New Mountain Capital had failed to reach an agreement with TCP-ASC on a potential acquisition [1]. Although discussions had been ongoing, no agreement was reached, causing a ripple effect in the financial markets.

New Mountain Capital, a private equity firm owning 32.4% of R1 RCM, and TCP-ASC, an investment vehicle jointly owned by TowerBrook Capital Partners and Ascension Health Alliance, had been considering a potential cash offer of $13.75 per share for all R1's outstanding stock [1]. However, the proposed deal was conditional on a waiver of a standstill agreement, which was not granted.

R1 RCM, in response to the ongoing discussions, formed a special committee of independent directors to evaluate strategic alternatives and directed that any talks between New Mountain Capital and TCP-ASC concerning a potential transaction cease [1]. The company has not approved any of the standstill waivers requested by the shareholders and emphasized that no assurances can be given regarding the outcome or timing of the special committee's review process [1].

This announcement marks a setback for R1 RCM shareholders, who had been anticipating a potential buyout offer. The sudden decline in share price highlights the importance of ongoing negotiations and the potential risks associated with takeover talks.

Sources:
[1] R1 RCM tells shareholders to cease buyout discussions. Becker's Hospital Review. March 11, 2023. https://www.beckershospitalreview.com/finance/r1-rcm-tells-shareholders-to-cease-buyout-discussions.html