Medical Centre operator Primary Health Care Limited (ASX: PRY) has sold its 22% stake, or roughly 36 million shares in Vision Eye Institute Ltd (ASX: VEI), opening up the possibility of a bidding war.
Primary sold its stake to a Shanghai-listed Chinese company, Jangho Group Co Ltd, for $33.8 million. The health care provider will make a pre-tax gain of $14 million, with the cash proceeds used to pay down debt. Interestingly, Primary sold the shares at 94 cents each, well above Vision Eye's last closing price of 81.5 cents.
Vision Eye is still under a takeover offer from hospital operator Pulse Health Limited (ASX: PHG). It appears highly unlikely that this takeover will proceed now – or Primary would've sold its shares to Pulse instead. Jangho now holds close to 36 million shares, or 20% of Vision Eye – a substantial blocking stake. The other potential move could see Jangho make a higher bid for Vision Eye, given the company was willing to pay 94 cents a share.
Pulse was offering the equivalent of 88.8 cents for each Vision Eye share. That may be one reason why Vision Eye's shares have surged 6.1% higher today to 86.5 cents, with investors anticipating a higher bid, and perhaps a bidding war.
But Jangho's purchase of the shares does seem a bit odd. The company specialises in construction products and development, interior decoration, although it does say that it has some medical and health exposure. Why the company wants exposure to Vision Eye – which focuses on services such as eye examinations, laser vision correction, other ophthalmic services, and owns a number of day surgeries – remains to be seen.
This story is not done yet by any means and investors could expect a number of twists and turns to come.
