LifeHealthcare Group Ltd [ASX:LHC], a leading distributor of cutting edge medical devices, managed to survive the widespread carnage affecting the local share market yesterday. As most other stocks plummeted, LHC shares rose 41% to $3.63.
The gains came on the back of a takeover offer by Pacific Equity Partners, (one of Australia’s biggest private equity companies, with a portfolio of $2.5 billion of funds under advisement) of $3.75 a share.
The deal is part of a binding Scheme Implementation Deed (SID), which places LifeHealthcare’s enterprise value at $211 million. This amounts to a 46% rise in the company’s shares against the previous close of $2.57 on 2 February.
In a bonus for shareholders, LHC can still offer an interim dividend when it announces the firm’s first-half results on 20 February, 2018.
Management is also considering offering a fully franked special dividend of 18 cents per share if the takeover goes ahead. In both cases, dividends would be offset against Pacific Equity Partner’s takeover price.
The company’s directors have unanimously supported the deal, urging shareholders to vote in its favour. In an ASX release, LifeHealthcare Chairman Bill Best, said:
‘PEP’s proposal represents a significant premium to LifeHealthcare’s recent share price, is [a] 100% cash consideration and allows for LifeHealthcare to pay a fully franked special dividend should the Board elect to do so. For these reasons, the Board considers PEP’s offer to be very attractive to shareholders.’
According to unaudited results, LHC’s revenue for the last six months amounted to $67 million (up 9.1%), with an underlying EBITDA of $9.8 million (up 9.8%).
What’s next for LifeHealthcare Group?
The deal still needs Foreign Investment Review Board and Court approval to go ahead. A meeting in May 2018 is expected to announce whether the takeover will proceed, but it seems like a no brainer at this stage.
Despite LHC’s strong result, investors may find themselves might want to thinking of selling and reinvesting elsewhere.
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Publisher, Markets & Money