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Healthscope share price on watch after Brookfield deal gets FIRB approval

The Healthscope Limited (ASX: HSO) share price is on watch this morning after the received approval from the Foreign Investment Review Board (FIRB) for its planned takeover by Brookfield.

What was in the announcement?

Healthscope made an after-market announcement that Brookfield Business Partners, NorthWest Healthcare and Medical Properties Trust (MPT) have received written correspondence from the FIRB that the Australian Government has no objections under the Foreign Acquisitions and Takeovers Act 1975.

Brookfield has proposed to acquire 100% of Healthscope by way of scheme of arrangement and a simultaneous off-market takeover offer announced on 1 February 2019, as well as the associated sale and leaseback of 22 freehold properties by Healthscope to NorthWest and MPT.

The latest step clears a significant hurdle for the proposed takeover and paves the way for Brookfield to complete the transaction in the second half of the year.

In early February, Healthscope agreed to the Brookfield takeover offer worth over $4.4 billion which has seen Healthscope’s share price rise to $2.44 per share – a market capitalisation of $4.25 billion at the time of writing.

How has the Healthscope share price performed so far this year?

The Healthscope share price is up 11% so far this year which has mirrored the performance of the S&P/ASX200 Index (ASX: XJO) in 2019 but outperformed the S&P/ASX200 Health Care Index (ASX: XHJ).

Despite posting robust returns to start the year, the Healthscope share price has still trailed prominent health care peers including the likes of Ramsay Health Care Limited (ASX: RHC) and Estia Health Ltd (ASX: EHE), which are up 12.5% and 16.5%, respectively.

Is there value in the Health Care sector?

While there are significant headwinds facing the Australian health care sector, including the likelihood of further consolidation and operational streamlining, the sector remains attractive for its non-cyclical properties.

With signs of slowing economic growth both globally and domestically, I think health care stocks can provide a diversification option, while those looking for more of a growth option should check out these top growth shares.

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Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. 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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