Healius Shares Rise for Second Day Running Following Proposed $2 Billion Takeover Bid

The share price of Healius Limited [ASX:HLS], one of Australia’s largest pathology and medical centre operators, has started the New Year in fine form with an 7.7% jump yesterday following a surprise takeover offer from Jangho Group (Hong Kong).

At time of writing, the Healius share price sits at $2.76, marking a rise of 4.94% from this morning’s opening price.

Healius, previously named Primary Health Care Limited, said this morning that the offer has been made at $3.25 a share.

What’s the catalyst behind Jangho Group’s offer?

Despite the fact that there is no indication any bid will go ahead, there was an inevitable rush from investors keen to benefit/see what will happen, although it could also be put down to Jangho buying as many shares as possible before the announcement.

Jangho Group (Hong Kong) is Healius’ biggest shareholder, with an overall stake of 15.93% of the issued shared capital. Jangho Group — which is largely known as a building sector manufacturer — is thought to be rapidly expanding into healthcare investments, particularly within Australia.

The timing of the bid is potentially significant, given Healius’ previous issues with low share prices, squabbles with the Fair Work Commission and ASIC behind the scenes.

It also continues the theme of Chinese firms moving further into healthcare in a bid to improve their nation’s health needs. Jangho Group previously bought out Vision Eye Institute in 2015.

What does it all mean for Healius?

Whether or not the board eventually decides to go ahead with the offer, one could possibly make the assumption that Jangho are taking advantage of Healius, given the previous difficulties. On the other hand, Healius are still on track to deliver a profit:

Healius is forecasting underlying net profit at or above $100 million in FY 2019 based on a stronger second half to the year. This would be growth on an adjusted profit basis of around 10% if achieved.’

In the meantime, the Healius board is remaining tight-lipped about any final decisions, saying that the offer is highly conditional and subject to regulatory approvals both in China and at home.


Ryan Clarkson-Ledward,

For, Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

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