Australia's Healthscope will sell its New Zealand pathology business, Asia Pacific Healthcare Group (APHG), to the NZ Super Fund and Ontario Teachers' Pension Plan Board, who will take a 50 per cent stake.
The sale is valued at more than $550 million and is subject to approvals, including consent from New Zealand's Overseas Investment Office.
APHG provides pathology services to 75 percent of New Zealand's population with over 2,000 staff operating across its network of 25 laboratories and 150 collection centres and has been heavily involved in providing testing as part of New Zealand's response to Covid-19.
NZ Super Fund chief investment officer Stephen Gilmore said the fund was pleased to return the asset to part local ownership.
"The Super Fund has been looking at opportunities to invest into the healthcare sector where we can bring together our investment expertise and external partnerships to drive innovation and add long term value to the business," he said in a statement.
"Never has the value of excellent healthcare and pathology services been more apparent than in the ongoing Covid-19 crisis and we look forward to working with APHG to continue supporting the health of the community," he said.
It is understood the NZ Super fund was the preferred bidder for the business, which is ultimately owned by Brookfield, a global asset management company.
The other bidder was said to be Keppel, a Singapore-based asset manager which specialises in marine, property and infrastructure assets, according to the Australian Financial Review.
Many would be happy to see New Zealand's biggest pathology testing facility return to local ownership during these times.
It is the second time the business has changed hands in just over a year
In June last year consent was granted for the pathology business to be sold as part of a global deal.
The Overseas Investment Office approved foreign-owned Brookfield and ANZ Hospitals to buy the New Zealand assets of ASX-listed Healthscope as part of a A$4.4 billion takeover.
Companies office records show APHG NZ Investments - the main shareholder of Healthscope New Zealand - made a net profit of $13.6 million for the six months December 2019. In the year to June 30, 2019 it made $34.4 million.
The financial accounts note that subsequent to the balance date the outbreak of Covid-19 had caused disruption to businesses and economic activity.
The group's pathology services were able to continue operating during lockdown but as the situation remained "fluid" as of the date of the financial statements (June 19) the directors' considered that the financial effects on the business "cannot be estimated for future periods".
Corporate earnings: Locked down for longer
April was the cruellest month. Corporate earnings for the most crucial quarter in living memory surprised on the upside in July only because expectations were so low in April. In that locked-down month, European full-year profits were expected to slump 40 per cent. Enough businesses beat woeful second-quarter expectations for UBS analysts to now forecast an annual decline of 33 per cent.
As some governments reintroduce restrictions on travel and socialising, many businesses remain painfully exposed. That vulnerability has been reflected in news of a rights issue of up to €2.75 billion from IAG, owner of British Airways, and a £2.1b loan loss provision at NatWest, as Royal Bank of Scotland is now known. Both are financially robust, but some rivals of IAG must be in serious trouble. The same will be true for a swath of businesses that bank with NatWest.
The flipside of coronavirus has been an earnings surge for tech groups and for securities traders. The corporate and institutional bank of BNP Paribas increased quarterly pre-tax profits 50 per cent to €1.6bn. The comparable figure for the London Stock Exchange was 9 per cent higher at £674m.
The mood is grim in most other sectors. IAG is raising more money in expectation of a lengthy travel downturn. Net debt to ebitda, a key metric of financial strength, had spiked unacceptably to 4.2 times by the end of June. Natwest's loan loss provision, equivalent to 1.7 per cent of its loan book, reflects a central expectation of a V-shaped dip, where UK GDP collapses by just over 14 per cent this year before recovering roughly the same amount in 2021.
Few businesses are prepared for worse outcomes, epitomised by NatWest's gloomiest scenario of a 17 per cent UK output loss in 2020 that cannot be recouped before 2025.
As Lex predicted, hefty state support has so far underpinned plentiful private finance, limiting financial collapses. Governments and central banks lack the resources to shield companies from further blanket lockdowns. From now on, choices over corporate and public health will be painfully counterpoised. - Lex, Financial Times
Decimal point problems
There seems to be an issue with companies getting decimal points in the right place of late.
On Monday Me Today advised the market that the net tangible asset value calculation in its May 26 financial announcement was incorrect. It was recorded as 0.023c and should have been 0.0023.
It follows that of a similar situation by Blackwell Global Holdings which the NZX's regulatory arm is investigating.
BGI, a financial services company, was placed in a trading halt on July 23 after the company admitted it misquoted its net tangible assets per share to be $0.15, later amending the amount of $0.0015.
The error meant that Blackwell told shareholders it owned about $75.3 million in assets, compared to the roughly $750,000 assets it actually had.
At the time of the June 25 announcement, BGI traded at 1.7c, but had since risen to 9.1c - a 12-month gain of 2126.4 per cent, which increased the company's market cap from $2m to $45.7m.
The gain came despite the company reporting a net loss of $693,000 after tax, and revenue of just $436,000.
Multiple directors and senior management had sold shares during the latest rally, and one director sold 5,861,000 shares - more than 1 per cent of the microcap company, broking house Jarden noted.