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Is Vision Eye Institute Ltd a takeover target?

Vision Eye Institute Ltd (ASX: VEI) has announced that it will received almost $11 million in damages and interest from eye doctor, Dr David Kitchen, following a favourable Queensland Supreme Court decision.

So What: Vision Eye Institute is an Australian-based provider of ophthalmic care, providing various treatments for people suffering eye disorders and diseases. The damages to be received relate to what Vision Eye Institute contended was Dr Kitchen’s wrongful termination of his service agreement with one of its subsidiaries, Icon Laser Australia, back in 2009.

His departure from the business, together with Vision Eye’s inability to find a replacement (due to the shortage of eye doctors in the region), forced it to close its facility in Rockhampton which impacted the company’s financial results at the time.

While Dr Kitchen will have four weeks to appeal the decision, Honourable Justice Applegarth has ordered him to pay Vision Eye Institute a total of $10,845,476.

Now What: Although the company’s recent earnings results have proven quite underwhelming, the Vision Eye Institute could certainly be one to watch.

To begin with, the company could stand to benefit from Australia’s ageing population (should that result in greater demand for eye care), while it could also become a takeover target for Primary Health Care Limited (ASX: PRY) which, as at 8 August 2014, owned almost 22% of the business.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.