The Australian Clinical Labs Ltd (ASX: ACL) share price is having a solid start to the week.
In morning trade, the ASX All Ords healthcare share is up 3% to $3.73.
Why is the ASX All Ords healthcare share rising?
The catalyst for this has been news that the company has launched a bold takeover approach for larger rival Healius Ltd (ASX: HLS).
According to the release, Australian Clinical Labs has made a nil-premium all-scrip off-market takeover offer of 0.74 shares for every Healius share.
While this may seem like an odd takeover proposal from the ASX All Ords healthcare share, there is method to its madness.
Australian Clinical Labs believes the real value of the proposal will come when the two companies merge.
It believes the merged entity would deliver pro forma earnings before interest and tax (EBIT) of $361 million in FY 2023. This includes cost synergies and operational improvement benefits.
Based on its forecast earnings and belief that it could trade at the current blended forward EV/EBIT multiple of 17.5x, it estimates that it could deliver a value uplift of approximately $2.1 billion. It notes that this equates to a 90% increase in the value per Healius share implied by the offer consideration.
Another positive is that Australian Clinical Labs believes the merged group would be a candidate for ASX 100 inclusion in time.
What's next?
As things stand, Healius has told its shareholders that it is looking at the offer. In the meantime, it has informed shareholders to take no action.
Management commented:
The Board of Healius advises shareholders to take no action in respect of ACL's takeover offer. The Board will evaluate the offer and ACL's bidder's statement and provide shareholders with a recommendation in due course.
Until then, there is no need for shareholders to take any action. Healius will keep its shareholders fully informed of any further developments.
