China’s Jangho Group makes $1.8 billion takeover offer for Healius, offering $3.25 a share

The stock surged 12 per cent in early trade on the on the takeover news, and by 1300 AEDT it was up 24¢, or 9.84 per cent, to $2.68.

Healius has been under significant pressure for a number of years: it’s former CEO Peter Gregg had to step down following charges by ASIC, and the company struggled to recruit enough GPs and retain them in its medical centres business.

Healius also lost the high-margin $30 million a year National Bowel Screening contract in 2017, and last year was hit with an $18 million backpay bill to staff of its medical centres division. Last September it was forced by the Fair Work Commission to offer pay rises of up to 20 per cent to nearly 1800 workers in its Victorian pathology division.

In November, CEO Malcolm Parmenter said a mild flu season has led to fewer doctor visits and pathology tests ordered in early 2019. However, the softer start to the year won’t stop the company delivering net profit of $100 million or above.

Healius said its board – led by Rob Hubbard – has started its assessment of the proposal and remains committed to acting in the best interests of all shareholders, however, it has not yet formed a view on whether the price offered would be recommend to shareholders.

It told investors to take no action in relation to the proposal, and that there is “no certainty” that it will result in a transaction.

Jangho’s proposal is subject to several conditions including completion of due diligence, receipt of final approval from Jangho’s board to submit a binding proposal; offer of debt finance on acceptable terms to Jangho; and receipt of necessary Australian regulatory approvals, including Foreign Investment Review Board.

It also would need the tick from any required Chinese regulatory authorities.

Jangho first made waves in 2015 with its $198 million acquisition of ASX-listed eyecare group Vision Eye Institute. In that deal Shanghai-listed company bought its cornerstone 19.99 per cent stake in Vision Eye from Primary.

According to one source, Jangho – which is one of the world’s largest curtain wall manufactures – is interested in local healthcare assets due to its high growth and diversification away from the building sector. Over the past two years sources said that Jangho was interested in making a bid for Healius but ran into trouble getting the needed funds out of China.

In November 2016 Jangho told The Australian Financial Review that “In Australia, we will make more investments.”

Jangho did not respond to calls from the Financial Review on Thursday.

​Since its Vision Eye deal, it has snapped up a stake in Primary, and more recently bought into IVF player Monash IVF.

One source speculated that the timing this early in the New Year, was there to take Healius by surprise.

“This is clearly a hostile bid,” he said. “Jangho has had enough of the performance (issues) and debacles at Primary. They timed the bid to catch them on the hop.”

Healius has appointed UBS as financial adviser and King & Wood Mallesons as legal adviser.

Source link Finance News Australia

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