Rumours of a Healius takeover are confirmed, but will the bid be accepted?

A Healius takeover is the market’s worst kept secret no longer. After months of rumours, Australian Clinical Labs (ASX:ACL) told its shareholders it was making a bid that, will create Australia’s largest pathology company, if the bid is accepted. 

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Healius takeover to create $2.1bn in value uplift

ACL told investors that a Healius takeover would unlock $95m of cost synergies, achieve a pro forma EBIT of $361m and a potential value uplift of $2.1bn if the group was to trade at the current blended forward EV/EBIT multiple of 17.5x. 

It said the deal would create Australia’s largest pathology provider and psuriked the better track record of its own management compared to Healius, saying it was better equipped.

ACL is offering 0.74 of its shares for every Healius share. 

A lot riding on this deal

Whatever happens of this deal is that it will take up a lot of time and attention of both companies. It is not expected to be complete until late September and is subject to ACCC and FIRB approval. 

But there is huge incentive for the deal to go ahead. ACL announced its FY23 EBIT would be $68-$74m, barely a quarter of what a merged group would achieve.

Both companies, as well as Sonic Healthcare (ASX:SHL), benefited rom skyrocketing revenues during the pandemic due to PCR tests. As we return to normal, investors are skeptical even as they boast of increased revenues from their non-COVID businesses. 

Whether or not the Healius takeover goes ahead, investors should keep an eye on what happens with the pathology sector more broadly. 

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