Why the Hills Ltd share price has crashed today

Hills Ltd (ASX: HIL) has seen its share price tumble 18.6% to 48 cents, after the company deferred the proposed merger of its Health Solutions business with international healthcare technology company Lincor Solutions.

The company says the demerger has been deferred, “due to current market volatility”.

The newly demerged company – to be called Lincor Limited – was expected to IPO on the ASX, and conduct an equity raising, but that is also on hold. The company says it will proceed with the demerger and the Lincor IPO in 2017 – depending on suitable market conditions of course.

hills share price chart

Source: Yahoo Finance


Hills is in the midst of a multi-year turnaround, after diversifying into far too many sectors including electronics, home & hardware and building & industrial. It also expanded into healthcare.

Electronics included TV antennas and TV systems, electronic security and radio frequency systems. Home & hardware included the ubiquitous Hills Hoist washing line, while building & industrial included metal building products, tubing and other metal products.

In 2009, it all came unstuck as economies around the world slowed, including Australia. Hills was forced to restructure its business – and is still in the process of doing so – although without much success. In 2009, Hills saw an underlying net profit of $28 million from revenues of $1.2 billion. Last financial year, the group reported an underlying loss of $775,000 from revenues of $329 million.

As you can probably imagine, the share price has followed and has dropped 54% in the past five years and 90% over the last ten years.

At the time of the demerger announcement, Hills saw its share price skyrocket by more than 45%, with investors apparently keen to get a piece of the Lincor IPO.

Unfortunately for shareholders, today’s bad news is highly unlikely to be the last of the bad news from Hills. Foolish investors might want to give the company a wide berth.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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