Thomson Medical – BT

Healthcare stocks ride on offer news

FIRST, Parkway Holdings found itself being pursued by suitors. Now, Thomson Medical Centre, with its niche focus on obstetrics and gynaecology as well as paediatric services, has piqued the interest of Singapore’s high-profile investor Peter Lim – and this isn’t the first time that interested parties have come a-calling for Thomson Medical either.

Last week, it was announced that Mr Lim had launched a general offer for Thomson Medical at $1.75 per share, which values the company at about $513 million. This comes on the heels of Mr Lim’s purchase – via his investment holding company Sasteria – of a 39.34 per cent stake in Thomson Medical, which he bought from Thomson Medical’s founder Cheng Wei Chen and his family.

According to an announcement filed with the Singapore Exchange yesterday, Sasteria has acquired a further 3.34 per cent in the company at an average price of $1.746 a share, beefing up its stake to a total of 42.68 per cent. One of the reasons cited for Mr Lim’s interest in the company is Thomson Medical’s potential to develop further as a regional healthcare company.

So it’s probably no coincidence that the general offer comes at a point when Thomson Medical’s consultancy and management project in Vietnam – the Hanh Phuc International Women and Children Hospital in Binh Duong Province – is opening its doors, and as the group is scouring potential sites for a second hospital in Vietnam.

Closer to home, recent additions to its portfolio, such as the Thomson Women Cancer Centre and the fairly new Thomson Paediatric Centre, are making healthy contributions to the group’s financial performance. Mr Lim also holds a sizeable stake in Malaysia-based TMC Life Sciences, which specialises in fertility treatment and stem cell banking, which suggests that there are synergies to be had between Thomson Medical and TMC Life.

Mr Lim’s general offer for Thomson Medical seems to have rejuvenated interest in healthcare stocks. Shares in Thomson Medical closed at $1.75 yesterday, but other stocks in the sector have also risen since news of the general offer broke last Friday. Parkway Life Reit gained two cents to close at $1.68 yesterday. Shares in Raffles Medical shed six cents to close at $2.24 yesterday, but this is still six cents higher than Friday’s closing price. However, shares in Healthway Medical Corp remained unchanged at 15.5 cents at yesterday’s closing, after gaining 3.3 per cent in Monday’s trading session.

But the question now is whether Thomson Medical will remain listed. At an offer price of $1.75 per share – the highest share price the company has ever been valued at since it went public in 2005 – the offer is an attractive one, representing a 62 per cent premium over the last traded price prior to the announcement. It is also more than double the average closing price of 82 cents per share for the six-month period prior to the offer.

As one analyst pointed out, the pool of healthcare stocks on the SGX has been narrowing this year, with few reputable listed private healthcare players left.

Mr Lim’s bid for the company comes just some months after Malaysia’s Khazanah Nasional and India’s Fortis Healthcare were embroiled in a corporate battle for Parkway. And according to an announcement on the SGX yesterday, applications have been made to the SGX to delist Parkway. This comes on the back of Khazanah’s unit, Integrated Healthcare Holdings, announcing in mid-October that it was exercising its right of compulsory acquisition to acquire the remaining 5 per cent or so that it did not own in Parkway.

With all the interest in Parkway and Thomson Medical in recent months, investors who snapped up shares in Raffles Medical this week are clearly banking on it being next in line to be the belle of the ball.

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