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Why the Healius share price will be in the spotlight tomorrow morning

Looking through magnifying glass

The Healius Ltd (ASX: HLS) share price will be in the spotlight tomorrow morning on reports that it sealed a $500 million deal on the weekend.

The medical facilities operator agreed to sell its 70-odd medical centres to Australian private equity firm BGH Capital, reported the Australian Financial Review.

The agreement, which is understood to be binding and fully funded, will make BGH the largest operator of general practice clinics in the country.

Takeover defense

These medical centres generated $183 million in revenue and $30 in earnings before interest, tax, depreciation and amortisation (EBITDA) in the six months to end December 2019, according to the AFR.

The divestment is seen as a defensive strategy to impede the takeover of Healius by Partners Group, which offered $3.40 a share for all of the company back in February.

Healius rejected the non-binding offer and it’s been a one-way street for its share price since as it slumped to $2.53 on Friday.

Can Healius shares outperform?

Management will be hoping for a big boost in the stock to justify the snub to shareholders. While it remains to be seen how the stock trades on Monday morning, history is on its side.

ASX stocks that undertake a divestment tend to outperform and recent transactions, such as Wesfarmers Ltd (ASX: WES) cutting the apron strings of Coles Group Ltd (ASX: COL), could put Healius shareholders in a good mood.

Healthcare sector underperformer

That would be a refreshing change as there isn’t much goodwill floating about for Healius. The stock crashed 20% over the past year when its peers have been faring a lot better.

The Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) share price gained around 2% while the Sonic Healthcare Limited (ASX: SHL) share price dipped 8% over the same period.

In contrast, the S&P/ASX 200 Index (Index:^AXJO) lost 11% of its value, no thanks to the COVID-19 global market meltdown.

Foolish takeaway

I can’t help feeling that BGH got a better deal than Healius, assuming the centres are being acquired on a 10 times EBITDA multiple.

While that’s within a reasonable range for acquisitions, some might argue that defensive assets in this ultra-low interest rate environment would be worth more.

Healius is likely to use the proceeds from the asset sale to repay debt and to focus its resources on growing its pathology and diagnostic imaging business.

The group had been trying to sell its medical centres since the start of the year before the coronavirus pandemic scared off some potential bidders.

It may not be a big surprise that BGH emerged as the victor given that it raised a lot of capital in 2018 for its takeover fund and it already holds medical facilities in its portfolio.

The acquisitive firm also owns now-delisted educational services group Navitas Limited (ASX: NVT) and is reported to be in talks with Village Roadshow Ltd (ASX: VRL) to acquire its theme parks.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Ramsay Health Care Limited and Sonic Healthcare 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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