Aust Clinical Labs makes $2.5b offer for larger Healius

Australian Clinical Labs has lobbed an unsolicited all-scrip takeover offer at its larger competitor Healius, in a potential $2.5 billion tie-up that would create Australia's largest pathology provider.

The merged company would be "knocking on the door of the ASX100" and the combination would result in $95 million in annual recurring cost synergies, chairman Michael Ascher told investors on a Zoom call on Monday.

If successful the merger would be a rare case of a smaller company acquiring a bigger one. ACL has a market capitalisation of $745 million, 75 labs and 1,326 collection centres, while Healius is worth $1.7 billion, has 96 labs and 2,087 collection centres. 

Mr Ascher and ACL chief executive and executive director Melinda McGrath made the pitch to investors that their team had consistently delivered superior performance over Healius despite their smaller scale.

"We have in Australian Clinical Labs an extremely well-run, high-performing buiness with a track record of success in consolidating acquisitions," Mr Ascher said. 

"And in Healius, we have a company which finds itself under pressure in its operating performance over a long period of time."

Ms McGrath told the call that she had more than 15 years in pathology and 30 years in health care restructuring, including 25 as a CEO. 

"I've designed and led ACL's organisational restructuring transformation and overseen the integration of five ACL acquisitions," she said. 

Over the past seven years, ACL has acquired the pathology businesses of Healthscope and St John of God's, as well as Perth Pathology, SunDoctors and Medlab Pathology.

The takeover offer is contingent on 90 per cent of Healius shareholders accepting it, as well as clearance from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.

Under the deal, existing Healius shareholders would receive 0.74 ACL shares for every HLS share held. They would own 68 per cent of the combined entity while existing ACL shareholders would own 32 per cent. 

The deal is at a nil premium, which RBC Capital Markets analyst Craig Wong-Pan called "opportunistic", but he agreed there were cost synergies to be had by the combination.

He said, though, that the ACCC would likely expect asset divestments to obtain approval of the merger, which could reduce its synergies.

At 11.14am AEDT, Healius shares were up 9.7 per cent to $3.05 while ACL shares were up 4.0 per cent to $3.745.

A Healius executive didn't immediately respond to a text message seeking comment.