Australian Clinical Labs withdraws Healius takeover offer
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More news: Australian Clinical Labs said it intends to withdraw its off-market scrip offer for Healius after the ACCC said it opposed the deal.
In an announcement on Friday, the ACL board told investors that it is "concerned that there is significant uncertainty at the current point in time as to what an appropriate merger ratio would be given the difficulty in assessing the actual performance that Healius is likely to achieve in FY24."
The statement also said that the ACCC's decision "was not unexpected" and that it "gives ACL the ability to challenge the ACCC’s position directly in the Federal Court if it makes a new offer for Healius in the near future."
ACCC opposes Australian Clinical Labs’ proposed acquisition of Healius
The news: The ACCC has opposed the proposed acquisition of pathology services provider Healius by Australian Clinical Labs.
The numbers: ACL and Healius are two of the three private pathology providers that typically compete for large private hospital contracts and referrals from specialists practising at private hospitals. The ACCC said that a merger of ACL and Healius, which in some regions are the only two pathology providers available to patients, would operate more than 50% of approved pathology centres in Australia.
The context: The competition regulator concluded that the deal would be likely to result in a substantial lessening of competition in Australian pathology services markets, especially in the supply of out-patient pathology services, private hospital in-patient pathology services, and commercial pathology services.
During its investigation, the ACCC assessed the existing level of competition provided by other pathology groups, including Sonic, 4Cyte and public sector providers, before considering that it would be unlikely that a new or existing provider could enter or expand in a timely way and to a scale sufficient to address the loss of competition resulting from any merger.
What they said: ACCC commissioner Stephen Ridgeway said: "We believe a combined ACL and Healius may be able to raise prices and reduce services for private hospital services and large commercial pathology customers, due to the limited competition it would face."
The source: ACCC Media Release
