It doesn’t feel like the Jangho Group, which is stalking Healius, is going away any time soon. So would a takeover be good or bad for the group's GPs?
If you’re one of the one thousand or so doctors working for Healius, previously Primary Health Care, you could be forgiven for being just a little nervous based on the news the Jangho Group, a large Chinese manufacturer (of curtain walls mainly), has made a serious takeover bid for Healius.
Healius has rejected the offers so far, despite the offer being nearly a third above the current market capitalisation of the company, which is about $1.7 billion.
Is it normal to reject such a seemingly good offer?
It is if you still think you’re company is worth a lot more, and if you track the share price of Healius, it’s come down quite a bit in the last year.
The board thinks that there has been a lot of work done on remediating the company, and that work hasn’t been realised in the market value yet. In about March last year the share price of Healius was nearly $4. When Jangho announced its bid, the price was closer to $2.40. The Jangho offer values the shares at $3.17.
The market thinks the Healius board might be taking a pretty big risk. A premium of 32% is a pretty good, even if your share price isn’t properly reflecting value.
But what to think if you are a GP working for Healius?
Curtain Walls
Jangho Group is a large and growing Beijing-based conglomerate which started in 1999.
Although strategically the group made a decision to get into healthcare in 2016, it’s hard to imagine the board of Jangho Group being well versed in the needs of healthcare professionals. The group owns 16% of Healius, but is not on the board, and doesn’t do much else in the health division, apart from owning a vision company. Healthcare is still a fledgling business for Jangho.
Resurrection
If you’ve read any of my more recent pieces on Healius, you’ll see rare praise and excitement from a career cynic. Primary Health Care was a basket case company. In the last few years, it’s been an amazing turnaround, most particularly in terms of its vision, strategy, and most particularly strategy on people.
Unfortunately, this brilliant work doesn’t seem to be affecting the share price, but the management is good, committed, experienced, and it believes in the resurrection of the company. I think it’s current value probably is not realised yet. But I’m no financial analyst. If I were working for Healius, I’d prefer no changes for the time being.
Takeover angst
This proposed takeover is a very big deal. It’s going to be distracting almost no matter what. Given Healius has a low performing share price, and to resist the suitors it needs to do better, that’s going to be hard, because takeovers like this significantly distract management.
Culture in global businesses
I’m going to walk the line here and suggest that being owned by the Chinese is different than being owned by public shareholders via an ASX listing. It’s a corporate culture thing.
Essentially, Healius is run by locals. It might be run by locals even after it is acquired. But I worked for a global company for years, owned, technically, equally by the Dutch and the English. I say technically because anything half-owned by the Dutch is pretty much fully-owned by the Dutch, and most certainly run by the Dutch.
It wasn’t so bad. But it wasn’t like being run by anyone I understood or knew. I, and many others from foreign lands, suffered quite a bit or culture shock in our early years working for that company. Am I saying working for the Chinese ultimately would be bad? No. I would not know. I’ve never worked for a Chinese company. But the culture difference will cause pain in the changeover at some point. It’s human.
Change isn’t always good
I really hate people who say to me: “embrace change”. No-one likes change. It’s not always good for you. Would Jangho Group be good for you as GP in Healius? I have not got a clue. It will end up being a big change though, of that I’m almost sure.
So there it is. Jangho Group might be good, it might not. But getting to wherever such a deal would eventually take you as a GP in Healius, it’s almost certainly going to be more change, and more adaption on your part.
I think you’ve all had enough for a lifetime already.
So Jangho Group or not Jangho Group from a GP perspective?
Early call I know, but “not”, for the simple reason that it’s probably going to be too much change on top of a lot already.
