Pathology company merger off after regulator opposition

The consumer watchdog has ruled against a merger of two major pathology companies. (Jeremy Piper/AAP PHOTOS)

A merger of two of Australia's largest pathology providers is dead in the water after the regulator blocked the move, citing fears it would lessen competition.

Shortly after the Australian Competition and Consumer Commission's announcement on Friday, Australian Clinical Labs said it did not want to go ahead with its acquisition of Healius anyway, due to the latter's recent poor financial performance and underwhelming earnings guidance.

"These factors have resulted in the Healius share price declining by 45 per cent since ACL announced its intention to make the offer on  20 March 2023," the company said in a statement to the Australian stock exchange.

The board no longer believed the offer of 0.74 ACL shares for each Healius share reflected the relative contribution that each party would bring to the merged company, the statement said.

But the board still believed a merger was compelling and "the two companies have the potential to be worth significantly more together than as standalone entities".

Standing in the way of any renewed takeover bid, however, is the ACCC's ruling.

"We consider that the proposed acquisition would be likely to result in a substantial lessening of competition as it would combine two of the three largest providers of pathology services in Australia, further consolidating already-concentrated markets," ACCC commissioner Stephen Ridgeway said.

Combined, the companies would operate more than half the country's approved pathology collection centres. In some regions, they are the only providers available. 

"We’re concerned that the proposed acquisition would impact patients and their referring doctors, potentially through longer turnaround times, shorter collection centre opening hours, reduced support for medical practitioners and increased prices for patients via increased private billing," Mr Ridgeway said.

ACL said the ACCC's decision was disappointing, but not unexpected, and maintained the merger would not substantially lessen competition. 

The company had offered to divest a package of collection centres across regional Victoria, Perth, and the Northern Territory, but this failed to mollify the watchdog.

ACL could offer further divestments to try convince the regulator or challenge its ruling directly in the Federal Court.

RBC Capital Markets analyst Craig Wong-Pan ascribed a low probability to the transaction going ahead, given the ACCC's concerns, the extent of undertakings that would be required to win the regulator's approval and difficulties the parties would have in finding agreeable terms.

Healius' share price had plunged 2.5 per cent to $1.48 by 2pm.

License this article

What is AAPNews?

For the first time, Australian Associated Press is delivering news straight to the consumer.

No ads. No spin. News straight-up.

Not only do you get to enjoy high-quality news delivered straight to your desktop or device, you do so in the knowledge you are supporting media diversity in Australia.

AAP Is Australia’s only independent newswire service, free from political and commercial influence, producing fact-based public interest journalism across a range of topics including politics, courts, sport, finance and entertainment.

What is AAPNews?
The Morning Wire

Wake up to AAPNews’ morning news bulletin delivered straight to your inbox or mobile device, bringing you up to speed with all that has happened overnight at home and abroad, as well as setting you up what the day has in store.

AAPNews Morning Wire
AAPNews Breaking News
Breaking News

Be the first to know when major breaking news happens.


Notifications will be sent to your device whenever a big story breaks, ensuring you are never in the dark when the talking points happen.

Focused Content

Enjoy the best of AAP’s specialised Topics in Focus. AAP has reporters dedicated to bringing you hard news and feature content across a range of specialised topics including Environment, Agriculture, Future Economies, Arts and Refugee Issues.

AAPNews Focussed Content
Subscription Plans

Choose the plan that best fits your needs. AAPNews offers two basic subscriptions, all billed monthly.

Once you sign up, you will have seven days to test out the service before being billed.

AAPNews Full Access Plan
Full Access
AU$10
  • Enjoy all that AAPNews has to offer
  • Access to breaking news notifications and bulletins
  • Includes access to all AAPNews’ specialised topics
Join Now
AAPNews Student Access Plan
Student Access
AU$5
  • Gain access via a verified student email account
  • Enjoy all the benefits of the ‘Full Access’ plan at a reduced rate
  • Subscription renews each month
Join Now
AAPNews Annual Access Plan
Annual Access
AU$99
  • All the benefits of the 'Full Access' subscription at a discounted rate
  • Subscription automatically renews after 12 months
Join Now

AAPNews also offers enterprise deals for businesses so you can provide an AAPNews account for your team, organisation or customers. Click here to contact AAP to sign-up your business today.

SEVEN DAYS FREE
Download the app
Download AAPNews on the App StoreDownload AAPNews on the Google Play Store