Healius takeover would benefit regional patients, pathology service says

Australian Clinical Labs says its takeover bid for fellow pathology tester Healius will improve the medical testing experience for regional patients, unlock significant cost savings and even result in carbon emission reductions in the pathology sector.

The company lobbed an all-scrip offer for Healius on Monday morning in a deal which would result in Healius shareholders receiving 0.74 of an Australian Clinical Labs (ACL) share for every Healius share they own. The deal values Healius at $1.2 billion, based on the stock’s closing price on Friday.

The offer, which comes as the Australian pathology sector tries to adjust to life after the rush of COVID-19 testing, boosted the shares of both companies at Monday’s open. Healius was 9 per cent stronger just before 11:15am to $3.03, while ACL shares were up 4 per cent to $3.74.

In an investor briefing on Monday morning, ACL chief executive Melinda McGrath said the merger of the two companies would deliver $95 million in cost savings, help successfully turn around the Healius business and create a stronger combined company.

The combined business would be Australia’s largest pathology operator, capable of knocking on the door of the ASX100 once the merger is completed. McGrath, who has 15 years of pathology experience including seven years at Healius, spruiked her management team’s experience in acquisitions and driving profitable businesses.

“We have consistently delivered higher margins due to superior cost control,” she said.

In its presentation and bidders statement, ACL also said the merger would provide benefits to doctors, patients and the environment.

“It will provide a more sustainable regional service over time,” McGrath said. ACL argues that by combining its networks across regional Australia, it can boost access to full-service labs and reduce turnaround times for processing tests because fewer would have to be sent away for review from where they were collected.

The company also says the merger would consolidate its logistics network and take 200 cars out of the companies’ combined fleets, which would result in a reduction of 1100 tonnes of carbon emissions a year.