Company Analysis: Life Healthcare Ltd.

Admittedly this stock drove my interest sheerly from the voluminous SENS statements that's been released this year and more particular in the second half of the year with much to digest.

Firstly it should be noted that the company had two major buyers acquiring it's shares throughout the year one of these being Allan Gray, the other Lazard Asset Management, a UK based fund that initially placed staked a 5% holding in the company but subsequently increased that to 10% in late September.

This came before the company announced an offer to buy the Alliance Medical Group, a leading provider of complex molecular and diagnostic imaging in Europe with headquarters in the UK. The progressive increase in holdings made by Lazard indicates a degree of confidence in unlocking value for this proposed purchase by Life Healthcare.

LHC Acquisition of Life Healthcare securities by clients of Lazard Asset Management (“Lazard”) https://t.co/hXeLZRwhyX

— JSE_SENS (@JSE_SENS) September 29, 2016

Data taken from MoneyWeb. For more go to:
http://www.moneyweb.co.za/tools-and-data/click-a-company/?shareCode=LHC

The deal is worth approximately R9 billion which lends some perspective to the scale of management's ambitions are working towards. Life Healthcare is currently valued at almost R33 billion so it's relevance in the bourse would be placed amongst the midcap selection. 

Management have said that they're looking to fund the deal with a range of financing options at their disposal such as a rights issue and loans facilities provided by various banks. 

Highlighted at the bottom of the table posted above shows the availability of shares that can still be issued and the number in issue. There's a good amount of flexibility in this respect and should be noted that the company has offered shareholders the choice of deciding whether to elect to receive dividends or take up new shares with profits distributed. 

This began in late 2015 and is continuing into the current activity in the company which implies management may have been eyeing this acquisition for some time but chose to wait for the results of the British referendum that's work favourable for them. 

Technical Analysis

On a technical basis it seems as if the stock price has found support along the R30 level which looks set to play an important part in delivering a good returns to traders and investors alike. 

The highlighted red area on the stochastic shows how many times the stock's price fell into the oversold territory during a five year period with circles pointing out the exact locations. The previous two occasions produced stellar results with the current situation possibly indicating the same prospects.