OPPORTUNISTS KNOCK TWICE AT HEALTHSCOPE

TALKING of diabolical, the renewed opportunistic grab for Healthscope from the BGH-AustralianSuper team could not have been more, well, opportunistically timed.

It is an ‘offer’ (very definitely in querying quotation marks) that Healthscope chairman – the recently robustly speaking Paula Dwyer – should find impossible to accept and difficult to reject.

The first, because it remains just far too – and indeed trickily – conditional; the second because it looks temptingly attractive in the context both of Healthscope’s recent share price and even more the direction of that share price, in the broader context of a limp-to-weak Aussie share market.

The first play by BGHAusSuper was revealed by Healthscope in late April; yesterday’s some six months later was at exactly the same proposed offer price: $2.36.

Between the two days, though, a lot has changed – and, in the words of a famous quote, not necessarily to the advantage of Healthscope and the rest of its shareholders.

That is, apart from AusSuper which has a 14 per cent stake and investor Ellerston which has indicated its support for the proposal with its 9 per cent stake.

In April the $2.36 was a 16 per cent premium to Healthscope’s share price in the market; yesterday the same $2.36 was now a 32 per cent premium to the current share price – presumably only coincidentally, exactly double that earlier offer premium.

On the surface, the fall in the Healthscope share price is ‘all about Healthscope’.

The overall market now is almost exactly where it was six months ago. It had gone up subsequently, but it had also more recently gone straight back down. But Healthscope had gone down much further, and ominously relentlessly, to be trading 13 per cent below where it had been before the offer surfaced in April.

This makes Dwyer’s task difficult enough; what makes it considerably harder is that since the first approach Healthscope has unveiled its value-creating and profit-generating new strategy – separating its hospital properties into a property trust.

The proposal has been received with somewhat less than raging enthusiasm. Investors – with the full knowledge that there was an opportunistic major shareholder on its register – had nevertheless been selling Healthscope down, and down.

The two other bits that makes it tough for the defence is that Ellerston has come out to support the offer, while it was neutral in April; and there was no sign yesterday (or, yet) of the alternative – and both equally opportunistic and equally unacceptable – bidder which was there in May (Brookfield) to at least add some bidding tension.

Plus the broader market is looking much more skittish now than six months ago. ‘Slowly boiling frogs’, otherwise known as investors, have woken up to the ‘surprise heat’ of Fed rate rises.

One could see a situation where $2.36 cash suddenly looked very attractive.