Dental care chain Pacific Smiles proved on Wednesday why the company was so sought after in a recent takeover battle, after more than doubling its underlying net profit to $8.5m.
Crescent Capital bid $2.05 per share for the stock, but its scheme of arrangement proposal was voted down, with rival suitor Genesis Capital, which has almost 20 per cent of the stock, against the transaction along with Pacific Smile’s founder Alex Abrahams, who has just under 10 per cent.
The move by Mr Abrahams to block the transaction was a surprise after he had been selling shares for more than $2 days before. The question now is whether Crescent Capital amasses a strategic stake for a bid later on, or Genesis Capital comes back at a higher price.
A sweetened deal by Genesis is considered unlikely given it has less firepower than Crescent, the former employer of a number of its executives, but it may bid in the months or years ahead if the share price falls again.
Still, it demonstrates that healthcare remains in favour with private equity despite parts of the sector falling on hard times.
TPG Capital is tipped as the front runner to buy the Lumus Imaging business from Healius for at least $700m, with the private equity firm already owning similar businesses in Asia, with some questions over whether Pacific Equity Partners owning hospital assets in other business may be an obstacle to overcome.
Meanwhile, Ramsay healthcare shareholders and healthcare deal watchers will be awaiting the Wesfarmers full year result with interest when it reports on Thursday.
There’s been speculation for months that Wesfarmers could be planning something big in the healthcare space, and with its share price trading high it provides it with plenty of firepower for mergers and acquisitions. The Perth-based conglomerate is known to be at least planning to take a look at the country’s largest diagnostic imaging provider I-MED when it comes up for sale for more than $3bn after the conclusion of the Healius sale process, and it has carried out plenty of work assessing the merits of buying the country’s largest private hospital operator Ramsay Health Care.
Separately, investors will be waiting for news on Thursday from Perpetual when it reports its results about how much the tax liabilities will be for its sale of its Corporate Trust unit to Kohlberg Kravis Roberts.
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