Australian health group Healius rejected a A$1.7 billion ($1.21 billion) takeover bid on Jan.7 from Chinese construction company Jangho Group.
“The Board’s view is reinforced by the highly conditional and uncertain nature of the proposal,” the company said in a statement to the Australian Securities Exchange (ASX). “In particular, the sources of funding are not apparent from the information provided by Jangho and the proposal is conditional on a number of regulatory approvals that are outside of the control of Jangho, including the approval of Chinese and Australian regulators. The status of these approvals is unknown.”
The company has begun a number of “strategic initiatives”to deliver more shareholder value than what was originally offered in Jangho’s proposal.
“We do not believe pursuing the proposal is in the best interests of shareholders other than Jangho,” Healius chairman Rob Hubbard said in an announcement to the ASX.
Healius, formerly known as Primary Health Care, is one of Australia’s largest owners of medical centers and pathology centers across the country. Healius is estimated to be worth A$2.88 billion ($2.05 billion), according to The Australian Financial Review.
Even if the offer were accepted regulatory hurdles are still expected to impede the deal. The acquisition would have required approval from cross-border mergers and acquisitions regulators from both countries.
If the deal proceeded, it would have made Jangho one of Beijing’s biggest healthcare players operating in Australia. With an ageing population burdening existing services in the world’s second largest economy, Chinese firms are increasingly looking at healthcare firms as high-quality assets.
Jangho, which is listed on the Shanghai stock exchange, is one the world’s biggest manufacturers of curtain walls and more recently has diversified into healthcare via a number of investments in Australia.
Taken By Surprise
J.P. Morgan healthcare analyst David Low told The Sydney Morning Herald (SMH) the bid’s timing is surprising, considering how Jangho has been on the register for two years and the generally low level of market consolidation in Australia.“The sudden possibility of a new owner will likely cause potential recruits to stand back and wait to better understand the new owners’ plans before signing up.”
Healius had been under pressure for a number of years. Former CEO Peter Gregg stepped down in early 2017 after the Australian Securites and Investments Commission charged him with falsifying records while serving as an executive at construction group Leighton Holdings between late 2009 and early 2014.
