The Healius Ltd (ASX: HLS) share price has jumped after receiving a takeover offer from Australian Clinical Labs Limited (ASX: ACL).
Healius and ACL are two of the largest pathology businesses in Australia.
Merger offer
ACL announced this morning that it is making an off-market takeover offer to buy all of Healius’ shares. ACL would fund this deal with new ACL shares – 0.74 ACL shares for every one Healius share.
But, the offer represents a premium of 0%, according to ACL. The idea is that both sets of shareholders will benefit from the combination, which I’ll explain more about in a moment.
If this offer is accepted, Healius shareholders would own 68% of the combined business, while ACL will own 32% of the combined business.
Benefits of a Healius-ACL merger
ACL said that the combination would create Australia’s largest pathology providers, creating a more diversified earnings base. The networks could enable a more efficient service delivery.
Another major benefit could be ‘synergy potential’ of approximately $95 million, bringing the companies together. This is equivalent to approximately 95% of Healius’ FY23 EBIT (EBIT explained). These synergies are expected to be achieved within four years. Those areas include: “lab consolidation, logistics optimisation, procurement benefits, and back-office and support restructuring.”
ACL also suggest that would “de-risk” the operational turnaround of Healius with a “proven management team”. ACL noted that its management team has “consistently delivered superior financial performance to Healius.”
ACL also suggested that there could be a potential value uplift of around $2 billion. The Healius share price’s rise may be recognising some of the boost.
Healius response
The board of Healius advised shareholders to take no action regarding this takeover offer.
It will evaluate the offer and provide shareholders with a recommendation “in due course”. Healius said shareholders don’t need to do anything and it will keep shareholders fully informed of any further developments.
Final thoughts on the deal and the Healius share price
ACL obviously thinks it can extract a lot of value out of the deal, and the combination could be beneficial for Healius shareholders.
Healius shareholders have already seen a quick gain for their shares, though they may have been hoping for a better price considering how much Healius has fallen over the past year.
It’ll be interesting to see how this plays out.
