Share price surge delays Healius takeover as suitors walk away

While it may seem like a sure bet that listed healthcare provider Healius will be taken over at some stage, a recent spike in its shares means it may not be imminent.

Shares in Healius have rallied sharply since the group delivered its full-year earnings on August 16 and the rally has scared off potential suitors.

The thinking is that shares need to be trading at less than $3 for a bidder to be interested in the medical centres owner and pathology and radiology service provider. They are now trading at $3.18.

This year, many private equity firms have examined the company, but now some have walked away.

One of them is understood to be the Hong Kong-based buyout fund PAG.

PAG was known to be keen to buy the business at the start of the year but has opted to move on to other targets.

The buyout fund this year purchased Oporto Chicken and Red Rooster owner Craveable Brands for close to $500m and is an active participant in the local market, so perhaps something else is now within its sights.

Partners Group is the latest to be running the numbers on Healius but is considered to be late to the party, with others considering the business for far longer.

Henry Bateman — the son of the late Healius founder Ed — is understood to have been eager to buy parts of the business, but this probably could only happen with backing from another buyout fund.

Apollo, EQT, BGH Capital, TPG Capital, Bain Capital and Kohlberg Kravis Roberts are the other names that have considered owning the healthcare provider, but some have since walked away for good.

Each division is seen as a different business case, with the pathology operation requiring volume, medical centres reliant on doctor retention, radiology needing capital and the IVF operation only a small part of the overall group, so a consortium deal could happen.

Government funding cuts to Healius’ pathology services could add to the uncertainty for any buyer.

Chinese shareholder Jangho, which holds 15.93 per cent of Healius, is said to be still eager to acquire the listed company, but its chances of securing government approval for the deal are viewed as slim.

This follows its $2bn takeover bid early this year by the Macquarie Capital-advised Jangho that was rebuffed by the company’s board.

On hand for Healius is investment bank UBS.

For the 12 months to June, Healius posted a 6.5 per cent increase in its underlying profit to $93.2m. The shares closed 3c down at $3.04.