ALS shares are soaring after rejecting a $2.7 billion private equity takeover

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Shares in ALS Ltd went on a tear after the chemical testing and analysis company rejected a $2.67 billion takeover offer from private equity groups Bain Capital and Advent International.

A short time ago, the shares were up 30% to $5.34 after coming out of a trading halt.

The board of ALS says the $5.30 a share offer is opportunistic and significantly undervalues the company.

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

The board says the bid comes at a record low point in the cycle for the company’s minerals business.

The company, one of the world’s largest and most diversified analytical testing services, has been hit hard by the downturn in the energy sector with its major customers cutting costs to meet falling oil prices.

Last week ALS posted a full year loss of $240.7 million as the oil and gas sector dragged down the rest of the analytical testing business.

Revenue for the 12 months to March was down 4% to $1.364 billion. The result included non-cash impairment charges of $314 million after tax against oil and gas investments.

However, ALS is growing its testing outside the minerals sector.

The company is now pursuing growth opportunities in life sciences, particularly in the food sector, and is evaluating a number of bolt-on acquisition targets in Europe and North America.

The life sciences division now accounts for 46% of revenue and the company expects this to grow by high single digit percentages in the next few years.

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