Shares of ophthalmic surgeries business Vision Eye Institute Ltd (ASX: VEI) have risen 1.7% today to 87.5 cents after the company rejected a takeover offer from Pulse Health Limited (ASX: PHG).
So What: Pulse Health, which is an Australian integrated health services provider, first made an offer for Vision Eye institute in July this year, offering 1.6 of its own shares for every Vision Eye share held. It was something of a strange offer, considering Vision Eye is somewhat larger than Pulse.
Indeed, Vision Eye's shares have traded at a considerable discount to the price offered by Pulse over the last few weeks, reflecting the market's lack of confidence that the deal would actually proceed. In today's 117 page announcement, that belief was confirmed with Vision's board recommending that shareholders reject Pulse's "materially inadequate offer", which was established as being neither fair nor reasonable by an Independent Expert Report.
This was further highlighted by the fact that the Shanghai-listed Jangho Group recently acquired 19.99% of the business from Primary Health Care Limited (ASX: PRY) for a price of 94 cents per share. Vision said that it had been advised by Jangho that it would not support Pulse's offer.
Now What: Although Pulse's takeover offer has been rejected by the board, the company did note that it had held preliminary informal discussions with 'a number' of other parties seeking to make a proposal to Vision, suggesting that a bidding war could be in the mix.
As such, investors currently holding the stock could be in for more pleasant surprises over the coming weeks or months. In saying that however, speculation of a potential takeover offer is no reason to buy new shares today, given the possibility that such an offer will never eventuate. As a result, investors may want to consider investing in some of the market's other attractive prospects instead.
