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A bid from Australian Clinical Labs (ASX: ACL) to merge with pathology services business Healius (ASX: HLS) has escalated into a slinging match, with the suitor now claiming the target is ‘failing’ shareholders by not recommending its $1.58 billion bid.
In response to Healius’ target’s statement lodged earlier this month, ACL claims the statement is ‘fundamentally flawed’, reiterating the ‘proposed merger represents the most value accretive option available to Healius shareholders’.
It comes after Healius took the ACL proposal to the Takeovers Panel in March, where it said the bidder’s statement was ‘misleading’ and ‘inadequate in a number of respects’, while also including an ‘unusually long offer period’.
In April, the Panel announced it declined to conduct proceedings based on Healius’ application, noting that there ‘was no reasonable prospect that it would make a declaration of unacceptable circumstances’.
Nevertheless, Healius released its Target’s Statement in early May and the company’s directors unanimously recommended shareholders reject the ACL offer.
In this context, ACL has come out swinging against Healius and claims the company’s board is ‘failing shareholders and is not acting in their best interests’.
ACL claims this is because Healius is ‘failing to fully assess the offer’ by not appointing an independent expert, ‘failing to disclose any alternative value creation opportunities’, and ‘refusing to engage in any substantive or considered way with ACL’.
“Given the potential value creation opportunities for Healius Shareholders as a result of the Proposed Merger (90 per cent increase in the value of a Healius Share implied by the Offer Consideration to $5.15 per Healius Share), ACL encourages the Healius Board to substantively engage with ACL in relation to the Proposed Merger,” ACL said.
“ACL has offered a meeting with the Healius Board to discuss the rationale for the Offer and the Expected Cost Synergies, but the Healius Board has declined to take up this offer.
“ACL continues to believe that the Proposed Merger represents the most value accretive option available to Healius Shareholders, particularly given recent announcements by Healius indicating continued underperformance.”
ACL highlighted that its target was likely to be cash flow negative for 2H23, and claimed that the company’s ‘ongoing practice of significant EBIT normalisations’ would ‘considerably inflate Healius’ adjusted “underlying” figures, relative to its statutory performance’.
The suitor also claimed that the reasons for Healius’ recommendation ‘have fundamental flaws’, and that Healius has ‘failed to engage in any substantive or considered way with the Expected Cost Synergies’ component of the proposed merger.
Further, ACL noted that no superior proposal has been disclosed by Healius.
Shares in HLS are down by 0.96 per cent to $3.11 per share at the time of writing, while ACL shares are down 2.1 per cent to $3.47 per share.
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