Healius will take ACL’s nil-premium takeover bid to Takeovers Panel

Healius says the 25 conditions included in competitor ACL’s takeover bid are “overly restrictive’’ and it will raise deficiencies in the bidder’s statement with the Takeovers Panel.

Tanarra chief executive and founder John Wylie.

Healius has criticised the “laundry list” of 25 conditions in competitor Australian Clinical Labs’ nil-premium takeover bid for the company as “overly restrictive” and says it will raise a number of deficiencies in the bidder’s statement for the proposed deal with the Takeovers Panel.

The pathology company, in a statement to the ASX on Monday, also referenced comments made to The Australian by major shareholders Perpetual Investment Management and Tanarra Capital, which together hold about 21 per cent of its shares, that both consider the deal to be “unattractive’’.

With the ACL scrip deal having a 90 per cent acceptance condition, the lack of support from these major shareholders would effectively scuttle the proposal.

ACL also said the conditions included in the ACL bid were such that it would be unable to adhere to them without detriment to running its business competitively and efficiently.

“Healius ... notes that it considers that a number of the 25 conditions of the ACL offer

are overly restrictive to the extent that running of the Healius business in the ordinary

course could lead to certain conditions being triggered,’’ the company said.

“This is exacerbated by the unusually long offer period of six months.

“Healius has advised ACL to the effect that Healius remains focused on running its business in the ordinary course and in a manner that preserves the goodwill of its business and its ability to compete vigorously in its markets, rather than trying to religiously adhere to a laundry list of conditions, many of which are not commercially critical to the offer and are otherwise overly restrictive.’’

Healius said it had written to ACL advising it of “a number of deficiencies’’ it considered existed in the latter’s bidder’s statement, and as it had not been able to resolve these issues with ACL, it would be raising the matters with the Takeovers Panel.

“Healius’ board and management remains focused on running Healius’ business in the best

interests of shareholders,’’ the statement says.

“Should, at some future time, a merger proposal be developed (by Healius, ACL or another party) which, in the assessment of the Healius directors, would be in the best interests of Healius’ shareholders, that will be given careful consideration.’’

The Healius board advised shareholders to take no action in relation to the bid and said it would provide further guidance in its target’s statement.

ACL has proposed an all-scrip takeover for Healius, which involves offering 0.74 ACL shares for each Healius share. This would equate to Healius and ACL shareholders owning 68 and 32 per cent respectively of the new entity.

The deal – first flagged by The Australian’s DataRoom column – follows investors placing pressure on the two parties to combine after a disappointing performance from Healius, with earnings falling dramatically since the height of the pandemic, when pathology services were in strong demand.

Over the weekend Perpetual Investment Management, Healius’s biggest shareholder with a 12.5 per cent stake, branded the proposal “unattractive” and “inappropriate”.

Fellow major shareholder Tanarra Capital, which owns another 8.5 per cent of Healius, launched a blistering attack on ACL, saying its many conditions set a record in Australian takeovers.

“Having considered the ACL proposal, our view is that the ACL proposal is unattractive in terms of its structure, certainty, and terms and in our view could likely result in an inappropriate transfer of value from Healius shareholders to ACL,” a spokesman for Perpetual said.

Tanarra chief executive John Wylie on Sunday made it clear he believed ACL’s bid for Healius — which it lobbed last week — was a dud deal and he would use Tanarra’s holding to block it, warning it would “inflict commercial damage on Healius”.

Mr Wylie criticised ACL for offering no takeover premium - despite stating that it wants to seize management control of the merged group and “in all likely board control” .

“ACL is seeking control at a discount to the pre-offer price for Healius, and a substantial discount to recent stock trading prices,” Mr Wylie said.

“ACL’s offer conditions are also unreasonable, unattractive, and have the potential to inflict commercial damage on Healius as one of its main industry competitors, irrespective of the outcome of the offer.

Mr Wylie said many of ACL’s conditions leave little room for adverse developments, while a potential six-month approval wait time from the Australian Competition and Consumer Commission will leave Healius hamstrung.

“They (the conditions) have been imposed by ACL knowing that, by its offer, it has placed Healius in a position where it faces an extended period of business uncertainty due to ACL’s need to obtain ACCC approval, a process that will take many months.

“This means Healius shareholders have little idea of what the real value of the ACL offer may be ultimately, if it ever becomes capable of acceptance.

“Other conditions attempt to restrict the continued effective operation of Healius’ business during the, likely prolonged, offer period, such as restrictions on hiring and retaining staff.

“It is in Healius’ shareholders’ interests that it continues to operate its business in the normal course, including hiring and retaining key staff and fully competing with ACL during a time when important industry contracts will be up for grabs.”

Healius shares closed 2.1 per cent higher at $2.97 on Monday while ACL stock was 2.5 per cent lower at $3.54.