Primary sells Vision stake

The share price of Vision Eye Institute jumped 4% today after Primary Health Care announced it has sold its 20% stake in the company to Jangho Group, a $3.3bn Chinese construction firm.

Why a Chinese construction firm that specialises in 'facade solutions' wants a stake in a network of Australian ophthalmology clinics is anyone's guess, but they were willing to pony up 94 cents per share, or $34m overall. This is 9% higher than Pulse Health's existing takeover bid for Vision, which was an all-share consideration of 1.6 shares in Pulse for every Vision share, for an equivalent value of 86 cents at the current price. We expect Jangho may soon launch its own bid for Vision.

Hostile takeovers can be long, drawn out affairs, so we'll keep you updated as things develop. At the current share price of 85 cents, Vision is trading close to what we consider its intrinsic value, so if you don't want to risk the takeover failing (which is still a possibility), you should consider selling your shareholding on the open market. You'll get cash in the bank within a few days, rather than months, and avoid any pain if the deal falls through. Of course, you'll also incur brokerage costs and forgo any upside if a higher bid is successful.

Vision's share price has increased 6% since Vision becomes a takeover target from 8 Jul 15 (Hold – $0.80) and 47% since Vision upgraded to Speculative Buy from 3 Mar 14 (Speculative Buy – $0.58).

Vision's directors have recommended shareholders take no action in relation to the Pulse offer and the company expects to release a target's statement next week. We'll update you again before the Pulse offer closes, but for now we're happy to sit back and enjoy the show. HOLD.

Disclosure: Staff members own shares in Vision, but they don't include the author.