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Healthscope Ltd shares rise on takeover speculation

One of the best performers on the local share market today has been the Healthscope Ltd (ASX: HSO) share price.

At lunch the private hospital operator’s shares have defied the market decline and pushed higher by 3% to $1.95.

Why are Healthscope’s shares on the rise?

With no news out of the company, today’s share price rise is likely to be attributable to renewed speculation that the company is a takeover target.

According to The Australian, private equity firms BGH Capital and Bain Capital are believed to be interested in launching a takeover of Healthscope.

Whilst these are just rumours, I wouldn’t be surprised if BGH Capital, which was founded by former TPG Australia head Ben Gray and Simon Harle, was interested in Healthscope.

After all, Mr Gray and Mr Harle jointly led TPG’s previous investment in the private hospital operator and made a healthy profit on the deal.

TPG, along with the Carlyle Group, paid $2.7 billion for Healthscope in 2010 before offloading it through an IPO valued at $3.6 billion four years later.

But these two private equity firms may not be the only potential bidders. Wesfarmers Ltd (ASX: WES) has previously been touted as a potential buyer of Healthscope. Considering the sizeable war chest that the Coles demerger will provide the conglomerate with, I wouldn’t be too surprised if it was keeping a close eye on developments.

Should you buy Healthscope shares?

Healthscope has been a potential takeover target numerous times over the last couple of years and nothing has ever materialised, so I wouldn’t necessarily expect anything this time around.

Because of this, I would suggest investors continue to avoid the private hospital operator until its performance improves.

Until then, healthcare shares such as Cochlear Limited (ASX: COH) and ResMed Inc. (ASX: RMD) could be far better options.

Alternatively, these high-flying growth shares could be even better investment options.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. 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 Scott Phillips.

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