Healius to reject $2bn buy-up bid

Directors of healthcare provider Healius are set to knock back the $2.1bn offer from Partners Group, according to sources.

Partners Group bid $3.40 per share for the company in February, valuing Healius at $2.1bn, and while sources in the market believe the bid is fair value and should likely be accepted, DataRoom understands that Healius is expected to tell shareholders to reject the approach.

Some believe Partners could come back with a higher offer, slightly sweetening the deal before gaining approval from the target’s board for a takeover via a scheme of arrangement to proceed. Earlier this week, analysts questioned whether the Healius takeover was in doubt because of the market turmoil.

Partners, which owns France’s largest pathology provider Cerba Healthcare, has been keen on Healius for its pathology operations, but medical centres would be non-core to the group.

The medical centres have been up for sale through UBS and Morgan Stanley, and the understanding is that Partners is comfortable for the company to continue with its plans to sell that part of the business, for which private equity buyers have been circling. The concern for some earlier this week about the bid from Partners was as the market started reeling, there was heightened fears that such a group would be able to lock in funding for its transaction.

But on the flipside, while the Healius market value has dropped to about $1.8bn from close to $2bn last month amid panic selling, the thinking among some is that Partners is buying a somewhat defensive asset, with the coronavirus likely to lead to more visits to pathology laboratories, GPs and diagnostic imaging. Partners already has invested in the business, securing the right to acquire 16 per cent of the stock held by China’s Jangho through a call option.

At that time of the offer, the Healius board said it would assess the offer and keep the market informed. The bid comes after a period when healthcare companies have remained in favour for private equity bidders, eager to capitalise on the trend of an ageing population.

Some market analysts have said that even if the board did not reject the Partners offer and the private equity firm came back with a lower bid because of the market volatility, it could place the suitor in a difficult situation if the market suddenly improved and the stock once again rallied.

A year ago, Jangho launched a $2bn takeover bid for Healius but it was rebuffed by the company’s board.

While the understanding was that it would return with another offer, challenges were thought to exist for the Chinese group securing Foreign Investment Review Board approval and it lost interest.

Partners Group has been working with JPMorgan and E&P Corporate advisory.

Its shares closed on Wednesday at $2.79.