Yes. It is worth noting that Harris has repeatedly sold out around $3.80 a share and then bought back in at around $3.20 a share over the last few years. See shareholder notices. Good for them to up tension on Jangho.
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The second-biggest institutional shareholder of takeover target Healius says its Chinese suitor would have to "significantly" increase its $2 billion offer to get traction with investors.
Justin Hance, portfolio manager and director of international research at the Chicago-based asset manager Harris Associates, backed chairman Rob Hubbard's call to deny Jangho Group due diligence after the board rebuffed the highly conditional proposal on Monday.
Healius said the offer was "opportunistic and fundamentally undervalues" the company and it had initiatives under way that, once completed, would deliver value to shareholders "in excess of" the proposal.
Liu Zaiwang, chairman of Jangho Group, has been the biggest shareholder in Healius for the past 2.5 years. Jangho
Jangho has been on the register of the healthcare giant for 2½ years and controls almost 16 per cent of Healius, formerly Primary Health Care.
After Jangho, T. Rowe Price and Harris Associates are the next-largest investors, holding 7.03 per cent and 5.66 per cent, respectively.
"We think this was the appropriate decision to not offer due diligence at this time, and the reason for that is a combination of one, the offer proposal is highly conditional [with financing not in place], but also the price offered of $3.25 a share is too low to justify the company opening up the books," he said.
"We would need to see a significantly higher valuation. The valuation that was put out gives zero credit for the transformation benefits that will come under the new CEO's plan."
Healius boss Malcolm Parmenter plans to update the market next month on his transformation progress, which is about half-way complete.
The Sydney-based company raised about $250 million from shareholders in August to fund a wide-ranging improvement program that included refitting old, tired medical centres and upgrading the technology behind its pathology business.
Long-time supporter
Harris Associates has been a long-time supporter, holding Healius for more than five years. The fund manager supported the company in its most recent capital raising.
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Mr Hance called the Jangho offer "opportunistic" given the equity market was weak, saying the medical centres business should be at inflection point at the same time the company raised money for these transformation initiatives, but shareholders have not yet seen any of the benefits.
"We are pleased with management of the company today," Mr Hance said. "It is early in terms of the transformation program, but the CEO certainly has the right pedigree and track record in terms of driving changes in these types of businesses. He has offered a credible plan in terms of Healius' performance going forward."
Healius shares jumped 10¢, on 3.82 per cent, to $2.72 on Wednesday, and have gained 22 per cent since December 31. However, they remain well below a 12-month high of $4.09 hit last March.
Despite the share-price weakness over the past year, Mr Morgan said Healius was in the best financial position he had seen for years and Jangho should up its bid.
Sources said Jangho was weighing options but was unlikely to go away. The Shanghai-listed construction group aims to become a big healthcare player despite its lack of sector experience. It bought Vision Eye Institute in 2015.
"The impression I get is they want to be big in the healthcare space, they want to be a global healthcare company – not just Chinese healthcare company," said one source.
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