Monash IVF may become takeover target again

Monash IVF is back up for discussion among dealmakers in the healthcare space as a takeover target.

At least one suitor — thought to be out of China — was known to be circling the company last year, but a deal never eventuated.

Later, smaller rival Genea was placed on the market, although that sale never proceeded. This was thought to be due to some objections by doctors involved. Ironically, Monash was looking at Genea the same time it was in the crosshairs of another party.

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Now the thinking is that Monash could be back in the spotlight of suitors towards the end of the year, although much of that depends on the impact it has from new competitors.

Its former top doctor, clinical director Lynn Burmeister, left last year and has had a non-compete agreement in place since. However, that agreement ends in about two months and is almost certainly expected to set up in competition to Monash.

The situation is likely to trigger a sharp fall in the share price of Monash, which may open up an opportunity for a interested buyer to strike.

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Much of their interest would be on what kind of revenue loss Monash may suffer as a result of competition from Dr Burmeister, and that is likely to be revealed should the company make an update to the market.

Monash is likely to have Morgan Stanley or Macquarie Capital for advice, given both worked on the group’s public market listing in recent years.

Meanwhile, debate continued to rage behind the scenes yesterday as to whether Healthscope had sold its Asian pathology business to TPG Capital too cheaply for $279 million. The sale price equated to 15.3 times the group’s earnings before interest, tax, depreciation and amortisation during the 2017 financial year.

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Some observers said the group could have secured a higher price for the business but was probably discounted because the business had not received the same level of focus from management it may have received in the past.

Meanwhile, the company some say is the one to watch is Primary Healthcare, with some betting that further investment in Asia could be on the cards.