UK-based Hg planned to buy Orion Health’s Rhapsody business & Population Health businesses: Orion Health Group Ltd.’s (ASX: OHE) stock skyrocketed by 54.45% on July 03, 2018 after UK based Hg intended to acquire majority ownership in Orion Health’s Rhapsody business and to invest in Orion Health’s Population Health business for a consideration of $255 million. After the completion of the transactions by Hg, OHE will undertake a share buyback offer at an estimated price range of $1.24-$1.29 per share. The bottom price of the estimated buy back price range reflects a premium of 46% to the closing price per OHE share of $0.85 on 2 July 2018 and is 55% to the volume weighted average trading price over the last 20 trading days. However, this deal by Hg is subject to a number of conditions, that includes the approval of the Hg Transaction and share buyback offer by Orion Health’s shareholders, approval of Overseas Investment Office and receipt of third party consents. Moreover, OHE will use circa $28 million of the transaction proceeds to acquire an ongoing 24.9% shareholding in the Rhapsody business. Hg has also planned to acquire a 24.9% stake in Population Health by investing circa $20 million. OHE will make an investment of around $12 million of the Rhapsody transaction proceeds in Population Health. Population Health has an enterprise value of $50 million. Additionally, OHE will continue to own 100% of its Hospitals business. Furthermore, the shareholders of OHE will have the option to elect 100%, 50%, 20% and 0% participation in the share buyback offer. Overall, the Hg Transaction will enable OHE to benefit from Hg’s funding and technology expertise while allowing each of Orion Health’s three businesses to capitalise on their full potential. This is an opportunity for OHE’s shareholders to realise a premium, in cash, to the Group’s current valuation for all or a portion of their shareholdings or continue as a shareholder to benefit in any potential future value creation. Meanwhile, OHE stock has risen 23.21% in three months as on July 02, 2018.
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