Healius Board Rejected Jangho Hong Kong’s Acquisition Proposal – What You Need To Know

  • Jan 07, 2019 AEDT
  • Team Kalkine
Healius Board Rejected Jangho Hong Kong’s Acquisition Proposal – What You Need To Know

Formerly known as Primary Health Care Ltd, Australia's leading healthcare company Healius Limited (ASX: HLS) has rejected the acquisition proposal from Jangho Hong Kong Holdings Limited. Following this news, the share price of HLS decreased by 5.818 percent as on 7 December 2019.

Through its subsidiaries, Jangho Group is already having 15.93% interest in the share capital of Healius, and it is eying to acquire the remaining interest which is why through its wholly owned subsidiary Jangho Hong Kong Limited it had sent an unsolicited and highly conditional proposal to acquire the remaining shares in Healius. 

However, after careful consideration of the Proposal, the Board of Healius has rejected the proposal on the ground that the proposal is opportunistic and fundamentally undervalues Healius.

Healius Board believes that the company will deliver significant operational improvements and benefits in the future on the back of various strategic initiatives, which is why the company is expecting that shareholders will have the opportunity to realize the value in excess of that outlined in the Proposal.

The other reason behind the rejection of the proposal is the highly conditional and uncertain nature of the Jangho’s Proposal. The proposal is subject to various regulatory approvals that are outside of the control of Jangho including the approval of Chinese and Australian regulators.

As per the Chairman of Healius Mr. Rob Hubbard, the Company’s Board is very confident in its strategy and future growth of the company. Due to the anticipated future growth and confidence in the Company’s strategy, the Board believes that the Proposal is not in the best interests of shareholders and it has recommended its shareholders to take no action in respect of this development.

Healius Limited runs operations in several divisions which includes Pathology division, Medical Centres division and Diagnostic imaging division. Pathology is the company’s largest division, and, in this division, the company has delivered consistent profitable growth over a long period of time.

In FY 2018, Healius Limited earned an underlying revenue of $1,740.3 million which were 4.9 percent higher than the corresponding previous year. On the business segmental front, the company earned a revenue of $1,090.6 Mn, $319.6 Mn, and $368.4 Mn in Pathology division, Medical Centres division, and Imaging division, respectively during FY18. In the Pathology division, the company made strong strategic progress and delivered revenue growth of 5 percent in FY 2018.

In the Imaging division, the company delivered an EBIT of $33.8 million which was ~ 17 percent higher than the previous year. During FY 2018, the company enhanced its Finance, Property and HR services. The company is expecting to report its first-half results during the week commencing 11 February 2019. The company will disclose further details on its performance and outlook in the first half results.

Meanwhile, in the past six months, Healius has witnessed a fall of 19.71 percent in its share price as on 4 January 2019. HLS’s shares traded at $2.590 with a market capitalization of $1.71 billion as on 7 January 2019 (AEST 2:36 PM).


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