ACL Healius bid bordering on the pathological

Even though the Covid testing boom is over, Australian Clinical Labs still wants to create the country’s largest pathology provider by taking over the number one tester, Healius.

Australian Clinical Labs (ACL) Monday tossed an off-market buyout offer towards the much bigger rival Healius to see if it can get a bite with an all-paper offer.

ACL said the proposed merger between the two pathology providers would be made via an off-market takeover offer of 0.74 ACL share for every one Healius share.

ACL claims the terms are a nil-premium offer based on the Healius share price on the day of its half-year results release (February 27), and the last closing price for the Australian Clinical Labs share price.

That’s a bit rich of ACL – Healius shares fell to $2.81 on February 28, after the results and touched a low of $2.61 on March 2. Since then, the shares rose to $2.78 on Friday, Match 17, the trading day before the offer.

ACL shares fell more than 3% yesterday to $3.02. That hit a recent low of $2.87 in mid-February and hit a recent high two weeks ago today of $3.80. Ten months ago, ACL was trading around $5.22 a share and Healius shares were around $4.52.

Healius shares rose more than 8% on Monday to end at $3.012 while ACL shares rose 2.2% to $3.68.

It is a very aggressive move from the $700 million value ACL for the near $1.6 billion value Healius.

That there’s no cash involves makes the future of the offer problematic as cash starts to assume even greater importance with financial markets and banks under growing pressure.

In its release on Monday ACL claimed there was the potential for the merged group to have pro forma FY 2023 earnings before interest and tax (EBIT) of $361 million, including cost synergies and operational improvement benefits.

Australian Clinical Labs claims that this would lift the market value of the merged company by unlocking around $95 million of synergies between the two companies.

But existing ACL shareholders will be watered down – ACL said that 68% of the merged company would be controlled by Healius shareholders and 32% by ACL holders.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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