R1 RCM (NASDAQ:RCM) shares fell 10% in pre-open trade Tuesday after large shareholder New Mountain Capital said it is no longer interested in pursuing a joint proposal with TCP-ASC concerning a potential takeover of the company.
Despite not wanting to pursue a joint proposal with TCP-ASC, New Mountain Capital (NMC) continues to be interested in a takeover of the company. However, the firm revised its takeover offer to $13.25 per share from $13.75 per share. NMC also indicated that it would still be interested in having TCP-ASC participate in a potential transaction as equity co-investors.
Analysts at TD Cowen think the revised offer "significantly" undervalues the stock and makes a deal less likely.
"We think NMC's amended offer of $13.25/shr significantly undervalizes RCM and we doubt min. shareholders would vote in favor of this deal. NT impacts from Change and Ascension are transitory and don't impact RCM's LT underlying earnings power," analysts commented. "Discussion w/ mgmt suggests that w/o Change/Ascension, focus would be on strong op. perf, modular growth, solid pipeline, and on-track Providence onboarding."
Analysts added that the amended 13D from NMC, eleven days before the waiver extension's expiration, "suggests NMC may have hit an impasse in its talks with TCP-ASC."