ALS Rejects A$2.67 Billion Takeover Offer From Bain, Advent

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  • Offer ‘significantly undervalues’ laboratory testing firm
  • U.S. buyout firms made non-binding A$5.30-per share proposal

ALS Ltd., an Australian laboratory testing firm, rejected a A$2.67 billion ($1.93 billion) takeover offer from U.S. buyout firms Bain Capital LP and Advent International Corp., sending the stock soaring.

The A$5.30-per-share cash bid “significantly undervalues” the company, ALS said in a statement Thursday. The proposal was 31 percent more than the Queensland-based firm’s last closing price.

Before today, ALS had tumbled 69 percent from a 2012 high and the company described the takeover approach as “opportunistic.” The shares Thursday jumped close to the level of the spurned offer, indicating investors expect either another bid or interest from a new suitor.

“It’s very rare that a company comes out and their first bid is their last,” said Mark Taylor, an analyst at Morningstar Inc. in Sydney. “They usually keep some powder dry.”

ALS, which was halted from trading before its announcement, climbed 27 percent to A$5.15 at the close in Sydney. Only one of 13 analysts tracked by Bloomberg recommended investors buy the stock, before today’s announcement.

"We are extremely surprised and disappointed,” Bain and Advent, both based in Boston, said in a joint statement. “With access to due diligence we could very quickly finalize a compelling proposal for ALS shareholders to assess.”

Global Footprint

ALS, first established as a soap-making business in 1863, has 13,000 workers across six continents and offers testing services in the minerals, life sciences and energy industries. Last month it reported lower-than-expected profit for 2016 and said its resources business was hurt by lower pricing and volumes. 

ALS’s future is in its life sciences business following the end of Australia’s resources boom, said Taylor at Morningstar. “That’s where all the growth is,” he said.

The target said the takeover offer coincided with the “record low point in the cycle” for its minerals business and was unanimously rejected by its board. 

“The company continues to see significant growth opportunities in life sciences and is well placed to capitalize on its position in this market,” it said.